US crude oil rig count
Baker Hughes, a GE Company (BHGE), published its US crude oil rig count report on July 27. Baker Hughes reported that US crude oil rigs rose by three to 861 on July 20–27. The rigs hit 858 for the week ending July 20—near the lowest level since May 18. However, the rigs have increased by 95 or ~12.4% year-over-year.
Active US crude oil futures have risen ~61.5% since June 21, 2017. The iShares US Oil Equipment & Services ETF (IEZ) has risen ~14.7% since June 21, 2017. IEZ has exposure to oilfield equipment and services stocks.
Active WTI crude oil futures decreased 2.5% to $68.69 per barrel on July 20–27. However, IEZ rose 1.5% during the same period. Helix Energy (HLX), Newpark Resources (NR), National Oilwell Varco (NOV), and Baker Hughes rose 14.1%, 9.7%, 8.8%, and 8.5%, respectively, on July 20–27. These stocks were among the top percentage gainers in IEZ’s holdings during this period. These stocks account for ~15.1% of IEZ’s holdings.
EIA’s monthly drilling report
The EIA (U.S. Energy Information Administration) estimates that the US crude oil output will rise in the seven shale regions by 143,000 bpd (barrels per day) to 7.47 million bpd in August compared to July.
Active WTI oil futures have fallen ~9% since July 3. Another drop in oil prices could decelerate oil drilling and output activity. However, US crude oil rigs are recovering from almost a two-month low for the week ending July 20.
US oil prices are expected to end 2018 on a high note, which could see rigs rise in the coming months. Higher rigs could increase the US crude oil output and eventually weigh on oil prices.
Next, we’ll discuss hedge funds’ net long positions in US crude oil.