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Will Global Oil Demand Overshadow Ample Supplies?

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Part 6
Will Global Oil Demand Overshadow Ample Supplies? PART 6 OF 6

Will US Crude Oil Rig Counts Rescue Crude Oil Bulls?

US crude oil rig count  

On August 11, Baker Hughes (BHI) released its US crude oil rig count report. Baker Hughes (BHI) reported that the US crude oil rig count rose by three or 0.4% to 768 from August 4 to August 11.

Rigs have risen 94% from the same period in 2016 due to the rise in crude oil prices in second half of 2016. Moves in crude oil (XLE)(USO)(OIH) prices impact drillers such as Halliburton (HAL), Atwood Oceanics (ATW), Diamond Offshore Drilling (DO), and Baker Hughes (BHI).

Will US Crude Oil Rig Counts Rescue Crude Oil Bulls?

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US crude oil rig count: Peak and low 

The US crude oil rig count hit 1,609 in October 2014—the highest level ever. In contrast, rigs hit 316 in May 2016—the lowest level since the 1940s. Rigs have risen ~141% from lows in May 2016. The rise in rigs should lead to a rise in crude oil production, which would pressure oil (IEZ)(XES)(BNO) prices.

EIA’s monthly drilling report

The EIA (U.S. Energy Information Administration) is scheduled to release its monthly “Drilling Productivity” report on August 14, 2017. In its previous report, the EIA estimates that US shale oil production will rise in the seven shale regions by 113,000 bpd (barrels per day) to 5,585,000 bpd in August 2017.

Production is at its highest level since early 2016. It’s expected to rise mainly in the Permian and Eagle Ford shale regions during this period.

Impact 

President Trump’s energy plans could increase US drilling activity in 2017. A market survey showed that $57.0 billion has been invested in US shale oil production in the last 18 months. It would support US production and pressure crude oil (RYE)(VDE) prices.

Read Crude Oil: Price Forecasts and Hedge Funds’ Position for more information on crude oil price forecasts.

Read Decoding Global Crude Oil Demand and Supply Drivers and Refinery Demand and Crude Oil Inventories Drive Oil Futures for more information.

For more on natural gas, read Supply and Demand Could Drive Natural Gas Prices Higher.

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