US crude oil rig count rises
Baker Hughes published its weekly US crude oil rig report on August 21, 2015. The active crude oil rig count rose by three to 674 for the week ending August 14, 2015. The US crude oil rig count rose by two to 675 for the week ending August 21, 2015. Likewise, the oil rig count rose by two to 672 for the week ending August 14, 2015. The US crude oil rigs rose for the fifth consecutive week despite the mammoth fall in crude oil prices. The active US crude oil rig count rose by 37 in the last five weeks.
Impact of rising rigs
Crude oil rig counts generally rise during the period when oil prices increase. However, crude oil prices lost more than 30% from the peak of $62 per barrel during the peak in May 2015. Prices fell due to oversupply concerns. Crude oil rigs have risen by 37 over the last five weeks. This indicates that crude oil production is going to rise in the long-term.
The rising rigs benefit oil drillers like Schlumberger (SLB), Superior (SPN), and Halliburton (HAL). The EIA’s (U.S. Energy Information Administration) monthly drilling report suggests that the crude oil rig count will rise in September 2015. The rise in rigs increases production. This implies that US production will increase in the long term. As a result, crude oil prices are going to feel the heat.
Currently, crude oil rigs are 57% lower than the levels of 1,564 last year. Crude oil rigs fell because crude oil prices fell more than 60% due to oversupply concerns since the middle of June 2014.