Crude Oil Futures: Is It Time for a Correction?

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Part 6
Crude Oil Futures: Is It Time for a Correction? PART 6 OF 6

Why the US Crude Oil Rig Count Is Slowing

US crude oil rig count

On September 22, 2017, Baker Hughes (BHI) released its weekly US crude oil rig count report. Baker Hughes reported that the US crude oil rig count fell by five to 744 on September 15–22, 2017. Rigs fell for the third straight week.

US crude oil rig counts have fallen by 22 rigs or 3% in the last three months. They also near a four-month low. Rigs have slowed down due to lower crude oil (USO) (UCO) (DWT) prices in the past few months.

Why the US Crude Oil Rig Count Is Slowing

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The above chart shows the relationship between US crude oil rigs and crude oil prices. US crude oil prices are at a four-month high. Higher crude oil prices have a positive impact on drilling activity. They benefit oil producers (IEZ) (XES) (XLE) and drillers like Atwood Oceanics (ATW), Baker Hughes (BHI), and Diamond Offshore (DO).

Monthly drilling productivity report

The U.S. Energy Information Administration released its monthly “Drilling Productivity Report” on September 18, 2017. It estimates that US shale oil production will rise in the seven shale regions by 79,000 bpd (barrels per day) to 6,083,000 bpd in October 2017—compared to September 2017. US shale oil production is expected to rise for the tenth consecutive month in October 2017. Production is at the highest level since early 2016. It’s expected to rise mainly in the Permian, Niobrara, and Anadarko shale regions in October 2017.


US crude oil rigs are at the lowest level since June 9, 2017. The number of active oil rigs could rise if crude oil prices trade firm. On the other hand, the rise in rigs could increase US crude oil supplies, which would weigh on crude oil (SCO) (DBO) prices.

To learn about crude oil price forecasts, read Hedge Funds Are Turning Bearish on US Crude Oil.

Read Are Crude Oil Futures Signaling a Breakout? and Will OPEC Meeting Overshadow Excess US Crude Oil Supply? for more on crude oil.

For updates on natural gas, read Why OPEC’s Meeting Is Important for Natural Gas Prices.


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