US crude oil rig count
Baker Hughes, a GE Company (BHGE), released its US crude oil rig count report on July 13. Baker Hughes reported that US crude oil rigs were flat at 863 on July 6–13. The rigs have risen by 98 or ~12.8% year-over-year.
Active WTI oil futures have risen ~67% since June 21, 2017. The iShares US Oil Equipment & Services ETF (IEZ) has risen ~17% since June 21, 2017. IEZ has exposure to oilfield equipment and services stocks.
Active WTI crude oil futures decreased 3.8% to $71.01 per barrel on July 6–13. However, IEZ rose 0.9% during the same period.
Frank’s International (FI), Dril-Quip (DRQ), Helix Energy (HLX), and Noble (NE) rose 9.5%, 7.4%, 6.5%, and 5.9%, respectively, on July 6–13. These stocks were among the top percentage gainers in IEZ’s holdings during this period. These stocks account for ~5.8% of IEZ’s holdings.
Peaks and lows
The US crude oil rig count reached a record high of 1,609 in October 2014. In contrast, crude oil rigs hit 316 on May 27, 2016, which was the lowest level since the 1940s.
US crude oil rigs were steady at 863 during the week ending July 13—the highest level since March 13, 2015. WTI oil prices have dropped 4.2% in the last two weeks. Another drop in oil prices could slow down oil drilling and production activity.
However, oil prices are expected to end 2018 on a high note, which could see rigs rise in the upcoming months. Higher rigs could increase the US crude oil output and eventually pressure oil prices.
Next, we’ll discuss hedge funds’ net long positions in WTI crude oil.