Rig Count: Precursor to Collateral Damage for Oil Prices?

US crude oil rig count 

Baker Hughes (BHI) released its weekly US crude oil rig count report on June 9, 2017. Baker Hughes reported that US crude oil rig counts rose by eight to 741 on June 2–9, 2017. US crude oil rig counts had risen for 21 consecutive weeks. They’re at the highest level since April 10, 2015.

Rigs rose 1.1% on June 2–9, 2017. They have risen 126% year-over-year. According to the following chart, crude oil prices fell when US crude oil rigs peaked. So, US crude oil rig counts could be used as an indicator for decoding the fall in oil prices.

Rig Count: Precursor to Collateral Damage for Oil Prices?

Peaks and lows  

The US crude oil rig count peaked at 1,609 in October 2014. As a result, crude oil prices fell in June 2015. Lower crude oil prices have a negative impact on oil drillers.

The US crude oil rig count hit 316 in the week ending May 27, 2016—the lowest level since the 1940s. Since then, they have risen 135.4%. Drilling activity improved due to the recovery in crude oil (SCO) (XES) (IEZ) prices in 2016. Oil drillers like Baker Hughes (BHI) and Halliburton (HAL) rose 20.6% and 5.3%, respectively, in the past year. Moves in oil prices also influence oil producer’s profitability like Carrizo Oil & Gas (CRZO), Hess (HES), and PDC Energy (PDCE).

President Trump and US oil and gas drilling activity 

The U.S. Energy Information Administration will release its monthly drilling productivity report on June 12, 2017. US drilling activity is expected to rise in July 2017 and in the coming months. The successful implementation of President Trump’s energy plans could increase US crude oil output. The rise in US crude oil production in the oversupplied market could weigh on oil (XLE) (XOP) prices.

Read Will US Crude Oil Prices Hit $40 per Barrel Next Week? and Will Crude Oil Bears Overshadow the Bulls? for more on crude oil prices.