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Will US Shale Oil Production Rise for an 11th Straight Month?

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Dec. 4 2020, Updated 10:42 a.m. ET

Rig count 

Baker Hughes (BHI) published its weekly US oil and gas count report on October 13. US oil rigs fell by five to 743 from October 6 to 13. Rigs are at their lowest level since June 9. Rigs slowed due to lower crude oil (USL)(OIL)(DWT) prices in the past few months.

US crude oil (USO)(UCO) prices are down 9.2% year-to-date. Volatility in oil prices impacts oil producers (XLE)(VDE) and drillers (OIH)(XES) like Transocean (RIG), Halliburton (HAL), and Schlumberger (SLB).

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Peak and low for US crude oil rigs 

US oil rigs hit a record 1,609 in October 2014. On the other hand, rigs hit 316 in May 2016—the lowest level since the 1940s. Rigs have risen by 427 rigs or 135% since May 2016 due to higher crude oil prices in 2016.

US shale oil production

The EIA estimates that US shale oil production in the seven shale regions will rise by 81,000 bpd (barrels per day) to 6,120,000 bpd in November 2017 compared with previous months. It would be the eleventh consecutive rise in US shale oil production. Production is expected to rise mainly in the Permian shale region during this period.

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International oil rigs 

International oil rigs fell by 15 to 700 in September 2017 compared with August. But crude oil rigs rose by 31 or 4.5% year-over-year. Oil rigs are at a seven-month low.

Impact  

US crude oil rigs are at a four-month low. Rigs could fall further if oil prices trade lower. However, if rigs rise, they could increase US supplies and pressure oil (USO)(UCO) prices.

For more on crude oil, see Will Bears Run the Crude Oil Market in 2018? Also see Will US Natural Gas Prices Take a Tumble in 2018? for updates on natural gas.

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