uploads/2015/01/US-Total-Rigs1.jpg

Lowest US rig count since November 2010

By

Updated

The US total

According to oilfield service company Baker Hughes (BHI), there were 1,676 active oil and gas rigs in the US during the week ending January 16, 2015. That’s 74 less than in the week ending January 9. It was the biggest decline in the US rig count since January 2009.

The US rig count generally experienced an uptrend in 2014. But that trend has reversed in the past couple of months. Six consecutive weeks of falling rig counts show that US rigs are losing strength. This was also the tenth rig count decrease in the past 16 weeks.

This week’s rig count drop was the biggest we’ve seen since crude oil prices started to tumble. Now, the US rig count is at its lowest level since November 5, 2010.

The week’s figures were led by a steep fall in the onshore rig count. Read Part 6 of this series to learn more about the onshore rig count.

According to Baker Hughes, December’s average rig count of 1,882 declined by 43 from November’s average of 1,925. September’s average rig count, 1,931, was the highest since July 2012.

Article continues below advertisement

Why rigs were fewer last week

Last week’s decrease was due to a fall in both oil and gas rigs. Crude oil and natural gas rigs decreased by 55 and 19, respectively. Read the next part of this series to see how a fall in oil prices triggered the decline in the oil rig count.

In the past year, the total US rig count has dropped by 101. Oil rigs decreased by 42, or 3%. Natural gas rigs decreased by 55, or ~15%.

Total rigs increased by 28 for the same period ending January 17, 2014.

Rig count trends show companies’ inclination to spend on drilling

Rig counts tell us how many rigs are actively drilling for oil and gas, and suggest how confident producers are about the market for these products. Companies in the drilling environment include Hess Corporation (HES) and Chesapeake Energy (CHK). These companies are part of the Energy Select Sector SPDR ETF (XLE).

The rig count is one measure of oil and gas drilling activity. Oilfield service companies like Halliburton (HAL) use the rig count to gauge the industry’s health. Halliburton is part of the SPDR S&P 500 ETF Trust (SPY).

Advertisement

More From Market Realist