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US Rig Count Plunges By Most Since 1993, Production Hits Record Highs
Despite the dramatic plunge in rig counts, this week saw yet another surge in production to record highs and with storage levels getting close to full, it would seem - despite the bounce/squeeze in prices to $53 as the data hit - that supply remains well ahead of any demand. Total rig count dropped 98 to 1,358 - for the largest weekly drop of the 10 week run as cutting is accelerating rapidly - now down 30%. This is the biggest weekly rig count drop since 1993. West Virginia remains the relative hardest hit with rig count depletions but Permian Basin collapse 49 rigs to 369 this week.
US Oil Rig Count Down 84 to 1,056
Canada Rig Count +1
Total Rig count... biggest percentage weekly drop since 1993
with production remaining at record highs...
Charts: Bloomberg
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T. Boone Pickens was right again.
"Pump, baby, pump!"
thanks for this one and the chart, Tylers...
I've been trying to explain to people that just because these rig counts are going down has not meant that production has gone down, but some "folks" just weren't getting it. I will be passing this on to them. I'm sure they will have some new argument to give back to me though. lol
Drill baby drill. Now only for dentists and porn stars.
"Pump, baby, pump!"
Sarah Palin at night.
Who's Nailin' Palin? https://www.youtube.com/watch?v=gxlAhlHqrrc
It's Friday, get a sense of humor, you crusty-shorts junkers.
As Carpenter said, drillers got drill. Positive cash flow is not a requirement.
https://www.dmr.nd.gov/oilgas/stats/historicalbakkenoilstats.pdf
But who's going to finance new drilling in six months?
“You are going to reach an all-time high on inventory of oil and it will be reached within the next six weeks and then it will start to decline and you will be back up by the fourth-quarter this year...to $70-80 a barrel,” Pickens said.
But who's going to finance new drilling in six months?
A little elf named Janet.
These silver-lining predictions are all based on an everything-else-being-equal assumption.
It won't be.
http://www.foxnews.com/us/2015/02/13/judge-orders-gamblers-to-return-winnings-to-new-jersey-casino/
Casino : Return that money...
Me: I don't know officer one minute I'm enjoying my cigar next thing the whole place when up in flames...glad I got out though.
Production will continue going up because efficient wells are maximized, even while inefficient wells are shut. All wells are not equal, that's what bulls don't get. A well putting out 10 barrels is closed while a well putting out 500 increases to 1000. That's what's going on, producers need cash, oil production will increase while wells and rigs will decrease.
Sounds right, but barrels per day per well in the Bakken hasn't budged yet.
well, in fact if the barrles/day count has not budged yet the number of rigs has plummeted...seems like you should think about what you are saying for a few milliseconds longer....me maths thinks its so.......
Point well taken. In the Bakken, though, the well count actually exploded 200+ higher month over month.
What happens when there is no where to put all of this unused oil?
You invent something useless, like car-traffic, which uses it as fuel. Hey ... wait ... somebody already thought of that ...
They can put it in my backyard for free.
they will store the oil in these underground wells and then pump it out when they need more...
...oh wait...
You store it at fort knox, where the gold used to be.
Capped wells and/or firesales. Price volatility. Sudden $80+/bbl because they aren't producing as much, or sudden $20/bbl because they are trying to move as much as possible, or one, then the other. Either way, it will be a case of reality coming into the room with an iron glove on and an irrestable urge to start bitchslapping people.
man, yet another great question. What happens when willy wonka makes a trillion laffy taffy's but only sells a billion laffy taffys, yet keeps making an x number of laffy taffys per month to maintain his capacity for storing a trillion laffy taffys to keep the production going to maximum storage capacity....hahahahaha, making laffy taffy's may be the least of your problems, but certainly you will have to reduce the price to raise the demand...hahahahaha, laugh me a taffy.
What is storage capacity and how full is it?
According to what I've read, crude inventories in the U.S. have risen over 35Mbs in the last 5 weeks from 383 Mbs to 418Mbs. According to the EIA the U.S. has 373Mbs of storage capacity in various tank farms plus 70Mbs at the Cushing Oklahoma futures delivery hub.
So, if this info is correct, total US storage capacity is 443Mbs with 418Mbs used up and 25Mbs to go. That will last for about another month.
But US refineries can also store another 148Mbs. I would guess the refineries can hold out for rock-bottom prices once there's nowhere else to put the crude. ...
The lag time is about 1.5 to 2 years. That graph won't show that...
It is possible that it could be faster due to the depletion rates of the wells in shale formations. Time will tell on that, but first, we need to get past the point where it is the rigs drilling the poorer areas that are dropping off. Either way, it should be interesting to see which shale producers go bust when, and it should be even more interesting to see what happens when the storage actually is full. If they have to take production offline because there is no place to put the stuff, it should be a bit chaotic, to say the least. Their options will be firesale or capping wells.
Also not considered are new wells coming on line which were started years ago. Bulls don't realize this dynamic, and it's huge. The highest growth ever forecast for 2015.
Lag time for what?
There is a lag time between dropping rig count and reduced production.
Drives those algos crazy!
Rig count, bitchez!
There could be another possible explanation; The entire "fracking revolution" was just another bullshit scam..The only thing these wells were "pumping", was billions in 0% financing and taxbreaks for the 1%ers
I got reports that exploratry and R&D has not slowed a bit. Don't know the lag time, if there is one.
Frigging in the Rigging.
Dec 2013 Bakken oil production: 866,000 barrels per day
Dec 2014 Bakken oil production: 1,163,000 barrels per day
Dec 2015?
As the global economy slows, prices will continue to fall. Oil isn’t just used for gasoline. It is used in the manufacturing of practically everything today from automobile tires to composites to plastics and so much more including the specialized fuels to transport them around the globe. If prices are falling then the consumption of those things is also declining which means the GDP of the nations producing and shipping them is declining. Analysts are trying to spin the lower fuel prices as “good deflation”, saying things like lower income families will have more money to spend from gas price savings. But the reality is that deflation depresses wages, shrinks the tax base, and creates unemployment. Nothing good comes from deflation. This December Oil projection seems to be pretty much on target.
http://www.globaldeflationnews.com/oil-light-sweet-crudeelliott-wave-upd...
EXACTLY!!
Another factor bulls aren't considering. Rally is just the dead cat bounce we knew would come. Built on misinformed bulls and hopium induced energy sector workers.
hey clown must u just spew headlines or what is incremental..the rig count is incremental while the production hype u spew is what last weeks data? You continue to degrade this site credibility by the minute on this subject
US production is up 636,000 bpd since Sept 2014 you dumbass. Rig counts have been falling for the past 6 months while production keeps increasing. Tht's because the rigs going offline are from older wells that are no longer producing. The new rigs are producing more.
You take down 5 rigs on depleted wells that were producing 20 bpd and put up one rig on new wells that will produce 200 bpd you have a net loss of 4 rigs but a net increase of 100 bpd. It will take 1-2 years for production to decrease to catch up tto the decrease in rigs. That's what morons like you don't understand. Offshore storage for the traders cost $20-40,000/day and costs are increasing as there are fewer tankers available for lease. The US SPR is full. China's SPR is nearing full. Other coutries are increasing production because they need the money. Oil prices could increase due purely to speculation, but production and inventory levels will continue to increase through the end of the year.
We were told to ignore the rig count from talking heads like you...but....The news via PXD today should put the nail in coffin on expectations of huge production increases in the US in 2015. Infact recently as u all know the IEA reduced expectations from 800,000 to 500,000 bb/d in 2015. Further production has already peaked sequentially weekly from EIAs own numbers for Jan...PXD CEO made it clear that 4q15 production will be flat vs prior year after peaking in 1H15. There is no denial supply will outstrip demand probably till May however. But in 2h15 or even June production should begin to decline and mkts should be balanced. CLR and PXD both signaled this and the rig count data in ND proves it despite repeated calls via Citi U.S. production could still grow by another 700,000 to 900,000 barrels per day despite a 40 percent reduction. The number of rigs active in North Dakota, for example, has fallen from more than 190 in September and October 2014 to just 141 on Firday, says the Department of Mineral Resources (DMR), which regulates drilling in the state. Most importantly, in a presentation to state budget-setters last month, the DMR estimated a fleet of 140 active rigs would be needed just to sustain output at the current level of 1.2 million barrels per day, given decline rates on old wells. The number of active rigs has now been reduced to 137 as of today and the DMR has stated it would fall to 120 by October while CLR and CHV stated there Bakkan rigs would fall 50%. As a reminder Bakkan over last 18 mths contributed the most to US production growth and now with prices there in the 40s it appears well below B/E levels....According to DMR WTI would need to be $60 for Bakkan to see production growth infact. I should have noted that the DMR stated ND production would decline by 100,000 bbd starting in july if prices remain below $60 WTI.....
So the question is will the market discount the known of supply outstripping demand over next few months or the less known that the myth on 800,000 bbd in increased prd wont be achieved? I say the latter. Infact there is a real possibility production will decline in 4q all together if prices remain under $60 which i and a growing number understand to be then bottom range of normalized pricing to grow production.
Yeah, ignore the EIA, every big bank energy desk analysis, oil field workers telling us production is rising, and the chart, which is a textbook dead cat bounce. Go with a single indicator and some uninformed bulls.
I agree. The EIA and its forecasts are often the basis for policy, how could they ever be corrupted or wrong? And big bank energy desks? No one's ever thought of those places as crooks gaming the system for their own advantage.
And now APAs production is flat in 1Q and will decline in 2H15 on plunging cap ex.....decline rates of 25% vs baffoon sell side asumptions of 6% industry wide result in produciton myth being dispelled....joke u and all the sell side on how poor the work is. There is no way APA will grow production nor the industry in 2016 as it will declne given decline rates, lower cap ex and price deck if not reaching ov er $70....so go dream on your oil collapse...
Weekly numbers continue to increase you moron. APA is less than 0.5% of the market.
Are we still comparing last week's rig count with December's projected production numbers?
The Canadian RE market won't correct until...
1. The rig count drops severely and its Resource sector has mass layoff
2. The CAD regains against the USD. At current rates, Canadian RE is ~ 25% cheaper for USD buyers.
In a Perfect Storm, all 3 collide: Job losses, strong CAD, RE tanks.
Ottawa won't let that happen: PM Harper & Friends love their jobs and knee-pads too much.
Better tell Albertans, they're already in a RE crash. And it will spread. You can't destroy a nation's #1 economic driver and expect it to have no effect on the rest of the nation.
So how many Americans do you know that are buying RE in Canada?
Gosh, a CAD$1M crack shack in Vancouver is now on sale at USD$800K, such a deal!
The CNBS cheerleaders are in full out propaganda mode about the "recovery". Let's see:
Oil is back above $50.00/bbl
10-year is back above 2%
Stawks & Equities are back near the ATH's
Decreased earnings, profits, consumer spending, retail sales etc, DO NOT MATTER
Forward, onward and don't forget kids...BTFDATATH!
Wait for the pressure drop to hit.
Stawks could get black swanned and storage is running low.
With the rig count down, as soon as you see any kind of a small drop in production you will get a $10 move in the price of oil -- UP!
When this thing called oil bounces back, it's going to be a b*t*h!
I would expect a minimum of 12 months lag between rig counts and production declines, to account for the time it takes for existing wells to begin decline (factoring in the quicker depletion rates of shale plays). It will also depend greatly on how much was "in the pipeline" so to speak in the 6 months leading up to the oil price declines, which I suspect is "a lot". Infrastructure and drilling that has already been financed and green lit that is going online right now. I wouldn't count on significant production declines until at least 4Q 2015. There's too much debt financing these plays for producers to shut-in wells, even if they're pumping at a loss.
I think it is quite simple. US production now reflect Iraq and Libya oil, legalized by US companies. Traded by weapons supply to ISIS and others in the pack.....