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The US Crude Oil Rig Count Falls by Just 12

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Oil rig counts are at their lowest level since March 2011

Oilfield service company Baker Hughes (BHI) reported that the US crude oil rig count decreased by 12 for the week ended March 27, down from 825 to 813. The number of oil rigs is now at its lowest level since March 2011. But the decline in oil rigs was the smallest in the last 14 weeks.

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

The latest figures mark the 16th consecutive weekly fall in crude oil rig counts. In those 16 weeks, the crude oil rig count has crashed by 733.

In the “other basins” category, there were six fewer active oil rigs. “Other rigs” are those in smaller basins or those that don’t fall within a specific geographical basin. In the DJ-Niobrara Basin located in Northeast Colorado and Southeast Wyoming, three oil rigs were idled last week.

The crude oil rig count has fallen by 796 or 49%, since hitting a high not that long ago. Between January 2005 and now, the US rig count hit its peak at 1,609 on October 10, 2014.

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Producers are at risk

Oil producers such as Whiting Petroleum (WLL), Marathon Oil Corporation (MRO), Concho Resources (CXO), and Continental Resources (CLR) are vulnerable to oil price drops. MRO and CLR together account for 2.9% 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 Crude Oil Prices Plunge as Production Concerns Persist.

One-year oil rig count comparison

In the last year, the number of oil rigs in operation dropped by 674, or ~45%. In comparison, the numbers grew by 133 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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