US oil rigs lose steam after reaching a record high

Alex Chamberlin - Author

Aug. 18 2020, Updated 5:23 a.m. ET

The Permian leads the oil rig decrease last week

Last week, the Baker Hughes oil rig count decreased by nine—from 1,601 to 1,592. The reduction was driven by the Permian at -4. Rigs classified as “others”—rigs falling in areas outside the conventional areas—lost two rigs.

This marked the first decrease in the past five weeks.

Despite the decrease, oil rigs are still close to the record high. In the previous week, the rig count reached its highest level—1,601—since February 2005.

Last week’s rise in U.S. oil rigs shows oil companies’ reduced ability to produce oil at current prices.

According to Baker Hughes, oil-targeted rig counts were setting and breaking new records almost every week. However, before last week’s fall, oil rigs experienced another temporary crash for the week ending August 22.

Since the beginning of 2014, the number of oil rigs increased by 214—or ~16%. In comparison, oil rigs increased by 44 during the same period in 2013. In 2014, most of the increase in rig counts was driven by activity in the oil-rich Permian Basin in western Texas. The region added 94 oil rigs.

Key stocks and exchange-traded funds (or ETFs)

Some of the major oil and gas producers that increased their oil-targeted drilling activities include Whiting Petroleum Corporation (WLL), Hess Corporation (HES), Halcon Resources (HK), and Laredo Petroleum (LPI). These companies are part of the Energy Select SPDR ETF (XLE).

Click here to learn about the U.S. Energy Information Administration’s (or EIA) recent estimates on U.S. oil production.

In the next part of the series, we’ll discuss drilling activity onshore and in the Permian Basin.

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