US crude oil rig count
Baker Hughes, a GE company (BHGE), released its US crude oil rig count report on May 25, indicating that the US crude oil rig count rose by 15 to reach 859 between May 11 and 18—the highest level since March 13. The rig count was 137 (~19%) higher than a year ago. WTI crude oil prices have increased ~60% since June 21, 2017, while the iShares US Oil Equipment & Services ETF (IEZ) and the VanEck Vectors Oil Services ETF (OIH) have risen ~17.8% and ~15%, respectively.
However, WTI oil prices fell ~4.8% last week, and OIH fell ~7.4%. Nabors (NBR), Fairmount Santrol (FMSA), and Ensco (ESV), which account for ~6.7% of OIH’s holdings, fell 12.4%, 11%, and 10.3%, respectively. These stocks fell the most among OIH’s holdings last week.
Monthly international rig count
Baker Hughes’s international oil and gas rig count, which excludes US and Canadian data, rose by three to 756 between March and April, and by 46 (~6.5%) year-over-year.
The US crude oil rig count fell to 316 on May 27, the lowest level since the 1940s. The rig count was 543 (~172%) higher than on May 27, 2016, mainly due to higher crude oil prices. WTI crude oil prices have increased ~60% since June 21, 2017.
Higher oil prices this year could increase US oil rigs and crude oil production, which might pressure oil prices. However, rising upstream activity due to higher crude oil and natural gas prices benefits oilfield equipment and service companies. Next, we’ll cover what could drive crude oil prices this week.