US Crude Oil Rig Count Hit September 2015 High: What’s Next?

US crude oil rig count 

Baker Hughes (BHI) reported that the US crude oil rig count rose by 21 to 652 rigs from March 17–24, 2017. The US crude oil rig count has risen 35 times in the last 38 weeks. US crude oil rigs are at the highest level since September 11, 2015.

The US crude oil rig count has risen 3.3% week-over-week and 75.3% YoY (year-over-year). Crude oil rigs rose as crude oil (SCO) (FENY) (DIG) prices recovered from lows in early 2016. The rise in the crude oil rig count could increase US crude oil production and pressure crude oil prices in 2017. For more on crude oil prices, read Part 1 and Part 4 of this series.

US Crude Oil Rig Count Hit September 2015 High: What’s Next?

Successful implementation of President Trump’s energy policies could also increase US drilling activity. It would be reflected in a higher number of active rigs.

Volatility in crude oil (PXI) (BNO) (VDE) and natural gas (FCG) (UNG) (UGAZ) prices also impacts oil producers and drillers. A rise in US drilling activity would increase the US crude oil output. In the short term, it would have a positive impact on companies’ earnings such as Hess (HES), Schlumberger (SLB), Baker Hughes (BHI), Diamond Offshore (DO), Atwood Oceanics (ATW), Whiting Petroleum (WLL), Rowan Companies (RDC), Halliburton (HAL), and Continental Resources (CLR).

Peaks and lows 

The US crude oil rig count peaked at 1,609 in October 2014. In contrast, it hit 316 in the week ending on May 27, 2016—its lowest level since the 1940s.

US drilling activity fell due to lower crude oil prices, which were the result of oversupply. The US crude oil rig count has risen ~106.3% from its lows in May 2016. As of March 24, 2017, crude oil prices have risen ~83% from their 2016 lows.

In the last part of this series, we’ll take a look at some crude oil price forecasts.