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Is the US Crude Oil Rig Count Slowing Down?

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Nov. 20 2020, Updated 3:15 p.m. ET

US crude oil rig count 

Baker Hughes (BHI) released its weekly US crude oil rig count report on August 4, 2017. It reported that the US crude oil rig count fell by one to 765 on July 28–August 4, 2017. US crude oil rigs fell 0.1% week-over-week. They’re almost flat in the last four weeks. Rigs have slowed down due to lower crude oil (IEZ) (XES) prices in 2Q17. So far, US crude oil prices have fallen 13.3% in 2017.

US crude oil rigs have risen 101% year-over-year due to the rise in crude oil prices in 2H16. Volatility in crude oil (RYE) (VDE) prices impacts drillers such as Transocean (RIG), Atwood Oceanics (ATW), and Diamond Offshore Drilling (DO).

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EIA’s estimates 

US shale oil producers are drilling multiple wells too close to each other. As a result, there’s a possibility of lower productivity. The EIA (U.S. Energy Information Administration) estimates that the output from oil wells is falling by 350,000 bpd per month—the fastest decline since 2012. US shale wells can produce oil from few months to almost two years. It suggests that US crude oil production could slow down.

Monthly international rig count

Baker Hughes’s international oil and gas rig count excludes data from the US and Canada. It estimates that international oil and gas rigs rose by three to 960 in June 2017—compared to the previous month. International oil and gas rigs rose 0.3% month-over-month and 3.5% YoY (year-over-year). International crude oil rigs rose 1.7% or by 12 rigs month-over-month and by 50 or 6.8% YoY in June 2017.

Impact  

Some traders think that US drilling activity could slow down. However, US drilling activity could rise in 2017 due to President Trump’s energy plans. A market survey showed that $57.0 billion has been invested in US shale oil production in the last 18 months. It would support US production and weigh on oil (XLE) (XOP) prices. Moves in oil prices impact drillers’ earnings such as Atwood Oceanics (ATW) and Diamond Offshore Drilling (DO).

Read Are Crude Oil Futures Trading Close to Resistance Level? to learn more about crude oil price forecasts.

Read Is the Worst Over for the Crude Oil Market? and Crude Oil Futures Are near a 2-Month High for more information.

For more on natural gas, read Supply and Demand Could Drive Natural Gas Prices Higher.

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