US crude oil rig count
Baker Hughes (BHI) reported that the US crude oil rig count rose by ten to 662 rigs from March 24–31, 2017. The US crude oil rig count has risen 36 times in the last 39 weeks. US crude oil rigs are at the highest level since September 4, 2015.
The US crude oil rig count has risen 1.4% week-over-week and 82.9% YoY (year-over-year). Crude oil rigs rose as crude oil (DIG) (RYE) (FXN) prices recovered from lows in early 2016. The rise in the crude oil rig count could increase US crude oil output and pressure crude oil prices in 2Q17 and 2017. For more on crude oil prices, read Part 1 and Part 4 of this series.
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.
Moves in crude oil (XES) (SCO) (VDE) and natural gas (BOIL) (UGAZ) (UNG) prices impact 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 Schlumberger (SLB), Atwood Oceanics (ATW), Diamond Offshore (DO), Chesapeake Energy (CHK), Rowan Companies (RDC), Halliburton (HAL), and Hess (HES).
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 ~109.5% from its lows in May 2016. As of March 31, 2017, crude oil prices have risen ~93% from their 2016 lows.
In the last part of this series, we’ll take a look at some crude oil price forecasts.