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US crude oil rig count crashes to lowest number since June 2011

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Oil rig counts at lowest level since June 2011

Oilfield service company Baker Hughes’s (BHI) crude oil rig count decreased by 33 last week, down from 1,019 to 986. This is the shortest decline in oil rig counts in the past two months. The steepest decline was on January 30, when the oil rig count decreased by 94. The number of oil rigs is now at its lowest level since June 2011.

The latest figures mark the twelfth consecutive weekly fall in crude oil rig counts. In those 12 weeks, the crude oil rig count has crashed by 560.

Among the resource shales, the most affected is the Williston Basin, where the crude oil rig count decreased by 11 in the past week. In the Permian Basin, rig counts decreased by seven.

The oil rig count has fallen by 623, or 39%, since hitting a high not that long ago. The rig count was 1,609 on October 10, 2014, the highest since January 2005.

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Producers at risk

Oil producers such as Whiting Petroleum (WLL), Hess Corporation (HES), Laredo Petroleum (LPI), and Continental Resources (CLR) are vulnerable to oil price drops. WLL and CLR together account for 2.8% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). With oil prices continuing to dip, these companies are taking a hit, as revenues are closely tied to crude oil prices. For more on the relationship between crude oil prices and rigs, read Part 9 of this series.

You might also be interested in Market Realist’s recent series, Natural gas and crude oil prices get slammed by inventory data, which covers the latest crude oil price movements.

One-year oil rig count comparison

In the last year, the number of oil rigs in operation in down by 444, or ~31%. In comparison, the numbers grew by 97 during the corresponding period last year. Activity in the oil-rich Permian Basin in West Texas drove most of the increase in 2014. Read Part 4 of this series for more information about Permian rigs.

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