This page has been archived and commenting is disabled.

US Oil Rig Count Tumbles Most In Over 5 Years,"Demand From Oilfield Customers Dropping Rapidly"

Tyler Durden's picture




 

"Unequivocally" not good. Following last week's surge in initial jobless claims for 'Shale' states, Baker Hughes confirms rig counts continue to tumble.  The last two weeks have seen the total US rig count fall the most since 2009 (and Canada down 9.3% this week alone). Seemingly confirming this weakness, The Kansas City Fed notes respondents see non-durable (petroleum) demand "sluggish", and rather awkwardly against the "everything's great meme," one respondent exclaims, "demand from oilfield customers is dropping rapidly." The current US rig count is now the lowest in 5 months.

US Rig Counts are sliding fast...

 

But just as in 2008, there is a lag... this has only just begun...

 

And Canada is getting crushed...

 

The Kansas City Fed region has a slightly bigger share of energy-related industries than the national average and the impact of falling oil prices is popping up in today's KC Fed factory survey. The composite index edged up to 8 this month from 7 in November, but the bank notes the strength is in durable goods manufacturing. Nondurables, which includes petroleum and coal products, have "remained sluggish." One respondent comments "Our industrial markets are OK, but demand from oilfield customers is dropping rapidly."

From Kansas Fed

“There is more general optimism about the economy, although the overall economy is still not great. Our industrial markets are OK, but demand from oilfield customers is dropping rapidly.”

 

“Rumored production cuts so far have not impacted our order backlog. We are still operating at full capacity while striving hard to expand capacity and hire more production personnel.”

 

“The price of crude oil is a large factor that will impact selling prices for some of our products. If it remains low, we will see prices for some products drop significantly as demand drops.”

 

“The prices we charge for our products can’t keep pace with the non-stop growth of the costs incurred for compliance with Federal agencies. Federal regulatory burden continues to sap our enthusiasm, risk taking, and meaningful job growth and pay raises.”

 

“We expect raw material prices to primarily be determined by demand and we are concerned demand could be lower. Parcel shipping companies have already announced healthy increases for 2015 even with declining energy costs. We expect our labor costs to continue to increase at about 3% annually.”

 

“Overbuilding of capacity will restrain price increases. Higher input prices will result in restricted margins unless offset by cost savings and efficiency improvements.”

*  *  *

Paging Larry Kudlow...

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 12/19/2014 - 14:25 | 5573309 SethDealer
SethDealer's picture

Gasoline is cheap but you lost your job!!!

Fri, 12/19/2014 - 14:29 | 5573325 silentboom
silentboom's picture

LET THEM DRINK GAS!!!!!!!!

Fri, 12/19/2014 - 14:37 | 5573368 Boris Alatovkrap
Boris Alatovkrap's picture

In Soviet Russia, many is use vodka for both is drink and fuel, so you are correct. In Russia all car is drive under influence of alcohol.

Fri, 12/19/2014 - 14:41 | 5573403 Pareto
Pareto's picture

+1 he he heee   Holy crap Boris?  Where you been?  Ruble geting pounded there a while back.  Putin distressed. All sorts of shit and shinnanigans happening in mother russia......AND NO BORIS!! :)  Glad to see you back!

Fri, 12/19/2014 - 15:01 | 5573528 Max Steel
Max Steel's picture

It's fine at 59/$

Fri, 12/19/2014 - 15:27 | 5573659 BuddyEffed
BuddyEffed's picture

I suspect that even the oil companies and TPTB know that EROEI is harder to fight than even the FED.  But the reasoning will be "Twist"ed as to causality.  Twisted causality is now the modus operandi.  It's Operation Twist from here on out.

Fri, 12/19/2014 - 15:09 | 5573562 Fed-up with bei...
Fed-up with being Sick and Tired's picture

OOOOOHHHHH, poi-fekt!   Second best post today.

Fri, 12/19/2014 - 14:50 | 5573454 RaceToTheBottom
RaceToTheBottom's picture

Actual work is highly overrated.  

Much better to just print up the money and hand it out for stock repurchases by firms.

 

Fri, 12/19/2014 - 14:36 | 5573318 Dubaibanker
Dubaibanker's picture

Saudi wants US oil production to decline significantly, until then the price of oil shall remain low.

There can be only 1 king of the jungle, as far as the oil supply is concerned.

Everything else including Ukraine, Cuba, Russia, North Korea, ISIS etc is a distraction and a by product of the Saudi price war.

All the pressure points, thus far, have been in US shale stocks, Norway and UK reductions, hedge fund closures in US, Schlumberger and BP lay offs, Carl Icahn's losses in Talisman Energy etc. Aside from Gazprom announcing some potential lay offs in the future, Saudi, Iraq, Iran, Russia etc have had no major impact yet. Though ALL will have an impact, but the biggest impact will be in the privately owned oil corporates which is the highest in US, Canada and EU but not in Middle East or Nigeria etc where everything is Govt owned.

And the ones impacted the biggest, fall the hardest and first, indeed!

Fri, 12/19/2014 - 14:37 | 5573379 Oldballplayer
Oldballplayer's picture

I almost cannot wait for the Iranians to shove a nuke up the asses of the Saudis. I don't want to see anyone melted. But if anyone IS melted, the Kingdom would be a good place to start.

Fri, 12/19/2014 - 14:42 | 5573397 Boris Alatovkrap
Boris Alatovkrap's picture

Boris is speak from experience as Custodial Engineer in 1986 Chernobyl, mop up of melting person is more unpleasant of experience. Watch melt is good fun, but cleanup is big job.

Fri, 12/19/2014 - 14:37 | 5573380 Boris Alatovkrap
Boris Alatovkrap's picture

But, but, but, maybe is act of Worldwide Jewish Illuminati, no?

Fri, 12/19/2014 - 14:52 | 5573471 free_as_in_beer
free_as_in_beer's picture

If you read enough ZH comments it always comes back to the Jews...

After all, they got away with killing God's son 2000 years ago, sky is limit after that, no?

Fri, 12/19/2014 - 15:04 | 5573530 EINSILVERGUY
EINSILVERGUY's picture

sometimes it seems that every jew hater has an account on ZH

Fri, 12/19/2014 - 15:18 | 5573594 aVileRat
aVileRat's picture

Nah, I would argue by now about 40% of ZH accounts are sockpuppets which are likely run out of 2 or 3 server farms. If you look at the log rolls, most of the old institutional posters, and even guys who were executives rarely post anymore since the ZOG vitrol has put ZH on a red-list for work reading. Other guys are straight up mental that repost that ZOG to threadshit.

Posts used to be full paragraphs where every guy argued his bull/bear. Now you got about 100 posts of Gold, or some random meme.

Fri, 12/19/2014 - 15:07 | 5573546 Dubaibanker
Dubaibanker's picture

If it is the Illuminati, why would they want to hurt themselves, Boris?

Most hedge funds, large Canadian and American oil stocks are plunging heavily. Norway and UK Govts are claiming crisis. Carl Icahn and other billionaires should be under some stress for losing hundreds of millions of dollars and could not see this coming.

There are somethings that the Illuminati definitely don't control, oil is one of them. Russian economy is another, where they cannot enter nor China nor Venezuela, nor Iran, nor Saudi.......so there goes over half of the world's population over which they have zero control!

Fri, 12/19/2014 - 15:10 | 5573572 Fed-up with bei...
Fed-up with being Sick and Tired's picture

The Saudi's will cut back on one less Bentley Turbo R next year.  Otherwise, all is well.

Fri, 12/19/2014 - 15:15 | 5573598 bid the soldier...
bid the soldiers shoot's picture

 

pish tush

This is nothing more than the engineer being hoist on his own petard.

Unless the Saudis can get the price of oil under $40 bucks and keep it there for a month or two, then this is just a plan that backfired on the West.

It's a lot like Karen"s plot in "All About Eve," to drain the gasoline out of Lloyd's car so that Margo would miss the train and Eve would get to give her performance as her understudy.

Surely you can see that!. 

Fri, 12/19/2014 - 14:28 | 5573319 nuclearsquid
nuclearsquid's picture

whew! look out below

 

/sarc

Fri, 12/19/2014 - 14:29 | 5573321 Bell's 2 hearted
Bell's 2 hearted's picture

"dropping rapidly"

 

bleh

 

me likee -

 

Cratering

Fri, 12/19/2014 - 14:28 | 5573327 KnuckleDragger-X
KnuckleDragger-X's picture

Rigs don't disappear, they just get parked in weedy lots. I drove by a field with 12 rigs in them for years till the latest drill mania started but the next time they won't need to be rebuilt for directional drilling.

Fri, 12/19/2014 - 14:29 | 5573336 Max Steel
Max Steel's picture

Rumors that George Soros could be appointed head of the National Bank of Ukraine. If true that would be just too hilarious. Who needs conspiracy when you have Ukrainian reality?

PS: "Great. The only possible way they could top that is to make Zbigniew Brzezinski the Proconsul of Ukraine ".

http://www.liveleak.com/view?i=ead_1418967540

Fri, 12/19/2014 - 14:34 | 5573361 Max Steel
Max Steel's picture

a fifth of the world's population but just 9 per cent of the world's farm land. Now China has signed a deal to buy vast areas of arable land in Europe's bread basket - Ukraine. Maidan peasents get back in fields , democrcay is waiting for you .

http://www.channel4.com/news/china-ukraine-farmland-food-security-invest...

Fri, 12/19/2014 - 14:50 | 5573451 McMolotov
McMolotov's picture

That would be some crazy shit. These assholes have no shame, so anything's possible at this point.

Fri, 12/19/2014 - 14:30 | 5573341 Bell's 2 hearted
Bell's 2 hearted's picture

OCC warning of increased risk ... mentions subprime auto, naturally

 

...

 

WASHINGTON — The Office of the Comptroller of the Currency (OCC) reports credit risk increased among national banks and federal savings associations during the first six months of 2014 

...

 

  • Competition for limited lending opportunities is intensifying, resulting in loosening underwriting standards, particularly in direct and indirect auto lending, leveraged lending, asset-based lending, commercial real estate lending, and commercial and industrial loans. Increased risk layering is also occurring in commercial loans.
  • The prolonged low interest rate environment continues to lay the foundation for future vulnerability.

http://occ.gov/news-issuances/news-releases/2014/nr-occ-2014-170.html

Fri, 12/19/2014 - 14:32 | 5573350 Hal n back
Hal n back's picture

what does the  media esp financial media not  understand about zero sum?

 

The US is becoming dumber and more corrupt/ethically challenged every day. And some of that is just ineptitude and laziness.

 

Fri, 12/19/2014 - 14:33 | 5573352 Omen IV
Omen IV's picture
Rig count for USA & Canada high was in December 1984 – 3,060 this was the high point – a historic number never again reached. By December 1985 – 2,342 or down by 23.5% By December 1986 – 1,202 rigs operating – or down from the peak 60.7% June 1986 oil at $9.62 Bbl. - 77% discount from peak price.
Fri, 12/19/2014 - 14:34 | 5573360 NoDebt
NoDebt's picture

$2.55/gal at lunch to tank up today in SE Pennsylvania.  "I'm lovin' it"TM

 

Fri, 12/19/2014 - 14:36 | 5573374 Bell's 2 hearted
Bell's 2 hearted's picture

more joy from OCC ... look for trading revenue to grow rapidly now that US taxpayer backstopping their bets:

 

WASHINGTON — Insured U.S. commercial banks and savings institutions reported trading revenue of $5.7 billion in the third quarter of 2014, down $0.7 billion, or 11 percent, from $6.4 billion in the previous quarter, the Office of the Comptroller of the Currency (OCC) reported today.

The OCC’s Quarterly Report on Bank Trading and Derivatives Activities for the third quarter of 2014 also reported that trading revenue in the quarter was $1.2 billion, or 26 percent, higher than $4.5 billion recorded a year earlier.

 

...

The report shows that the notional amount of derivatives held by insured U.S. commercial banks increased $2.6 trillion, or 1 percent, from the third quarter to $239 trillion. “The notional increase occurred entirely in the FX market,” said Mr. Wilhelm. 

 

http://occ.gov/news-issuances/news-releases/2014/nr-occ-2014-172.html

 

Fri, 12/19/2014 - 14:38 | 5573377 Jack Burton
Jack Burton's picture

Many highly paid workers will be getting Pink Slips for Christmas. The divorce Courts in the Oil Patches will be busy this new year! Oh yes, I know, their women wouldn't dump them when they lose their jobs. Wrong! That is just what many will do!  Ask any husband, with kids, that if they lost their job, "how long would the wife stay on"? Especially if she still has some looks left, these guys will be screwed, no job, no wife, court order banning child visits due to fake abuse claims, and the man can just go die somewhere for all their lovely ladies care, or the fucking courts, who consider men to be walking wallets, good only for money extraction. I know, I have a family member who handles the legal side of family law, she sees this everytime layoffs happen. It is very ugly, and it happens to many more men than people would like to think.

Disclosure: Never been divorced, never been layed off, This comes from a daughter who makes her living representing people in family law cases/

Fri, 12/19/2014 - 15:12 | 5573583 Fed-up with bei...
Fed-up with being Sick and Tired's picture

...and that is a bad thing, no doubt...oh, wait, maybe not.

Fri, 12/19/2014 - 15:13 | 5573585 Fed-up with bei...
Fed-up with being Sick and Tired's picture

...and that is a bad thing, no doubt...oh, wait, maybe not.

Fri, 12/19/2014 - 17:34 | 5574116 pippi68
pippi68's picture

Actually, it's once they get discouraged and won't find a new job and take up drinking full time that us ladies lose patience. I'm still with my spouse but things are not the same with me doing the money-making, the bills, the cooking, the cleaning, the childcare-- all of it. I'm tired! But since he's been off the booze I can at least get him to drive to the store or get the kids to their next gig. Times are hard. I guess my looks must be probably all gone by now. But before you cry too hard for all those laid off men, trust me, some of us women are doing the jobs of multiple people just to keep our families afloat. And for our lack of Y chromosome we just get paid 15% less for it.

Fri, 12/19/2014 - 17:34 | 5574117 pippi68
pippi68's picture

Actually, it's once they get discouraged and won't find a new job and take up drinking full time that us ladies lose patience. I'm still with my spouse but things are not the same with me doing the money-making, the bills, the cooking, the cleaning, the childcare-- all of it. I'm tired! But since he's been off the booze I can at least get him to drive to the store or get the kids to their next gig. Times are hard. I guess my looks must be probably all gone by now. But before you cry too hard for all those laid off men, trust me, some of us women are doing the jobs of multiple people just to keep our families afloat. And for our lack of Y chromosome we just get paid 15% less for it.

Fri, 12/19/2014 - 18:30 | 5574251 cnmcdee
cnmcdee's picture

Two rules of man wealth creation...

1. Do not live with a women from the oil patch..
2. Do not impregnate her...

Sounds like being a court dick is a long growth industry.. Come to Alberta the iq's of the rig workers is on par with either the lift kit of their truck or the remaining ounces of dope in thei consoles..

I'm by Red Deer and my last turn around there were already a bunch of shuttered workers and parked rigs.. Guess the gold diggers will have to fight over the few hockey players that live in the region..

Fri, 12/19/2014 - 14:38 | 5573383 Just Take It All
Just Take It All's picture

did yesterday's stock market action count as a rig?

Fri, 12/19/2014 - 14:58 | 5573511 Jack Burton
Jack Burton's picture

Somebody in the EU seems to understand that the EU economy without a continued supply of cheap Russian gas is toast! Read on.

 

"SOFIA, December 19. /TASS/. Bulgaria will issue all the required permissions required for starting the construction of the South Stream pipeline and keep working on the project, Bulgarian Prime Minister Boyko Borisov said after talks with the leaders of European countries on the sidelines of the EU summit in Brussels on Friday.

“I have received the full support and understanding of the European Council" So, while America crows about more sanctions, the EU must face economic reality, and that reality is, CHEAP Russian gas flowing into Southern Europe outside Kiev's control, is a net plus for economic development of the Southern EU member states. It is them who pressure Brussels to "fuck off". Brussels demanded the Southern nations give up energy for economic development so the USA can carry on it's proxy war on Russia. The EU is gravely deep in a sinking economy and flooded by African and Middle East asylum seekers in their millions. How to make homes for millions of new people, and at the same time shut doen the cheap gas supplies. Expensive USA LNG would bakrupt most of Europe, onl Germany makes enough money to afford wildly expensive LNG, and Germany already has cheap abundant Russian gas right from North Stream, going around Ukraine, "the sick man of Europe".

Fri, 12/19/2014 - 15:01 | 5573523 THE DORK OF CORK
THE DORK OF CORK's picture

Grot shop economics no longer a funny matter in us or UK....

http://m.youtube.com/watch?v=-jHBsYLIZpM

 

Fri, 12/19/2014 - 15:09 | 5573568 Jack Burton
Jack Burton's picture

As far as Russian Treasury is concerned, income from oil industry is just fine and is probably exceeding early 2014 estimates for next years budget. Even at tumbling oil prices, falling ruble is compensating more than enough - revenue rose roughly 12% year-over-year.
So, yes falling oil hurts Russia, but they still sell most of it in FX, dollars in fact. High value dollars! Russia runs on the rubel, all expenditures of the state are in rubels. So before Obama declares victory, he should run the numbers.

Year Month WTI Crude $ USD/RUB RUB revenue 2013 1Y AVG 97 33 3201 2013 November 94 33 3102 2014 February 103 36 3708 2014 May 103 35 3605 2014 August 95 37 3515 2014 November 75 46 3450 2014 December 60 60 3600 Crisis Average 88 41 3 497
Do NOT follow this link or you will be banned from the site!