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US crude oil rig count drops to lowest number since April 2011

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Oil rig counts at lowest level since April 2011

Oilfield service company Baker Hughes’s (BHI) crude oil rig count decreased by 64 last week, down from 986 to 922. This is the highest decline in oil rig counts in the past three weeks. The number of oil rigs is now at its lowest level since April 2011.

The steepest decline in oil rigs since 1990 occurred on January 30, 2015, when the oil rig count decreased by 94.

The latest figures mark the 13th consecutive weekly fall in crude oil rig counts. In those 13 weeks, the crude oil rig count has crashed by 624.

The Permian Basin Shale was most affected, with a crude oil rig count that decreased by 24 in the past week. In the “other basins” category, there were 22 fewer active oil rigs. Other rigs are those in smaller basins or those that don’t fall within a specific geographic basin.

The oil rig count has fallen by 687, or 43%, 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), Concho Resources (CXO), and Occidental Petroleum (OXY) are vulnerable to oil price drops. WLL and CXO together account for 2.7% 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, please read Part 9 of this series.

To explore the latest crude oil price movements, please refer to Market Realist’s recent series Crude oil prices: How low is low going to get?

One-year oil rig count comparison

In the last year, the number of oil rigs in operation was down by 521, or ~36%. In comparison, the numbers grew by 102 during the corresponding period last year. Activity in the oil-rich Permian Basin in West Texas drove most of the increase in 2014. Please refer to Part 4 of this series for more information on Permian rigs.

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