uploads///US Crude oil rigs  July

Crude Oil Rigs Could Fall More as the Bloodbath Continues

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Dec. 4 2020, Updated 10:43 a.m. ET

Crude oil rig count

Baker Hughes will release the weekly crude oil rig count report on July 24, 2015. Last week, Baker Hughes (BHI) published its weekly crude oil rig count report on July 17, 2015. The crude oil rig count fell by seven to 638 for the week ending July 17, 2015. In contrast, the active oil rigs rose by four to 645 for the week ending July 10, 2015. Active crude oil rigs fell for 30 of the past 32 weeks. The current crude oil rigs are 59% lower than the 1,554 rigs in 2014.

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Impact of crude oil prices on the rig count

Crude oil prices have entered the bear market. Oil prices have lost more than 20% from the peak in May 2015. US WTI (West Texas Intermediate) crude oil was trading around $62 per barrel in May 2015. It closed at $48.85 per barrel on July 23, 2015. The massive fall in crude oil prices will impact the drilling activity. In the US, many oil producers have announced a reduction in the production budgets. This will negatively impact oilfield companies like Schlumberger (SLB), Baker Hughes, and Halliburton (HAL).

The US drilling activity fell by a massive 60% from the peak of 1,609 in October 2014. It bottomed at 628 in June 2015 due to falling crude oil prices. As a result, the crude oil rig count could fall in the near term. The fall in the rig count could slow down the production. The slowing production might support oil prices. This will result in a rise in crude oil prices over the long term.

However, the consensus of bearish crude oil prices will also put pressure on oil producers and drillers. It also impacts energy ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Select Sector SPDR Fund ETF (XLE).

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