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Rig Count Drops For 14th Week In A Row, Fastest Rate In 29 Years
For the 14th week in a row, the US rig count fell 67 rigs to 1125, (a 5.6% drop to 41.4%, bigger than March 09's previous record 14-week decline of 41%). The decline in rigs contionues to tyrack the lagged oil price perfectly but has shown absolutely no impact on production levels as firms push for cashflows in a race to the bottom. As one analyst rightly noted, while rig counts continue to drop, companies are high-grading (shifting to more efficient wells), "the real thing that needs to change is U.S. production and that is not happening at the moment." April WTI Crude tested $45.01 before the data and bounced very modestly on the data.
- *U.S. TOTAL RIG COUNT -67 TO 1,125, BAKER HUGHES SAYS
- *U.S. OIL RIG COUNT -56 TO 866, BAKER HUGHES SAYS
The 14th weekly drop in a row continues to track the lagged oil price...
For an aggregate XX% plunge (the fastest plunge since 1986)
Rig counts drop but production rises...
* * *
Finally, as a reminder, here is Bloomberg to explain the 'link' between wells, production, and rigs...
Charts: Bloomberg
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"rigged" market?
It should be obvious to any sane person by now that we will never run out of oil.
they could just store it underground, eh.....
I've heard that about 200 workers are associated with each rig. Can anyone confirm? And does that mean each rig cut will eventually represent the loss of 200 jobs (or whatever the right number is)?
I think a rig employs a little over 100 people directly. I work in drilling. But then there are the people that do "completions" aka fracking. For each well drilled you need a frack crew and pipeline people to finish it and get it into production. That may get the total to 200 but I only work in drilling so im not sure how many people completions takes.
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Still too many rigs operating.
Yep, I remember when 600 rigs were maximum utilization. We've got a ways to go yet but the market is doing their best to speed the process up...
A hot knife going through $43 oil is when I get the Orville Redenbaker humming in the micro. No bounce off $43...a fucking straight line with a shitload of volume.
Hmmmmm...could hit 44 today.
Beautiful chart...from Bloomberg
Watch Four Years of Oil Drilling Collapse in SecondsCouple of thousand job cuts in last 48 hours....and FIRST oil company to cut dividend...
http://www.theadvertiser.com/story/news/local/2015/03/11/oil-companies-f...
Unexpected job cuts...hehehe....http://business.financialpost.com/2015/03/12/about-1000-oilsands-workers...
http://www.cnbc.com/id/102503675
2 brilliant articles.
One from American Bankruptcy Institute mentioning that energy sector debt has risen from USD 125bn in 2007 to USD 285bn in end 2014. Energy Sector is just 8% of the S&P 500 yet accounts for 20 percent of its high yield debt!
Welcome to debt fuelled boom in the USA that will soon collapse in 2015.....as oil drifts lower by 10 bucks per month! Wait to see below $40 before March rolls away.....
MUST READ:
The New Energy Crisis: Too much of a Good Thing (Debt That is)
Dark Clouds Looming for Small Shale-Oil Producers
If it continues beyond $40 many here will yearn for the days of only asking for the collapse.
Since you are a newbie, hope I will be seeing you in a month or two to discuss your opinion.
It is a function of both sides of the equation, demand is very weak due to job cuts, fuel efficiency, green energy, carbon emissions, new tech etc. Supply is probably highest EVER. I dont know what has gotten into the US Govt to suddenly produce highest gas and oil in 40 years! It's population has not risen as much. It cannot export to far away lands because most countries like China, Egypt, Turkey are its arch nemesis. Every one has long term contracts on top. What is US doing with its oil? It cannot store for years to come. I have no idea why US is producing so much oil despite 50% decline in oil's price. They must have a method to their madness. Certainly they are staring at a debt collapse and then more job cuts.
If demand drops dramatically and supply rises dramatically. There can only be one response. The price must decline dramatically too.
Which is exactly what is happening.
US has thus far, until today, not reduced supplies and they simply cannot produce more than Saudi.
Whatever the reason, the price will keep dropping and I shall talk to you in a couple of months.
However, I do believe that price will eventually rise to 50 dollar levels by end of the year or perhaps next year when the supply gets reduced.
I will be here at sub 40 oil. We shall catch up then and compare notes. The CAD should be at 1.30 and MXN at 1.16.
I think you are forgetting part of the story. Production can increase at a declining rate. The Bakken may be showing that now.
You are correct. The Bakken is tipping. I suspect we'll see other basins do the same in the next 45 days. The decline rates are too strong. However, we're too good at this now. Rigs can and will be deployed in response to any floor/rise in prices. Barring geopolitical upheavil, I thnk we're in for a medium term subdued price environment now.
This is natural gas act 2. Only difference being that it is globally traded.
The Saudi's wanted to playthe game and the name of the game is screw you and guess who is blinking?
What I need to know though, is this the lowest rig count since Lehman?
now THAT was good
What happens when the race to the bottom is over?
usa dollar dead
usa dollar dead
usa dollar dead
AHAH triple bag
Paper PMs are flat. Odd on a 1 percent plus positive move on the USD index. Let us see what these fuckers do on Sunday night.
<--Collapse first
<--WWIII first
in other news the US attacks Kuwait....as they haven't been in the news and that should prop up the market for another couple weeks. The problem the USA and Canada can basically supply the US...BIG PROBLEM FOR THE MIDDLE EAST
Sure, Canada doesn't need any oil for itself.
Canada uses around 30% of the oil it produces
Bullish?
Vlad's pumping gas at an Esso station in Oregon, but he wants everyone to know he's okay.
they stop pumping when they go out of business....no different than any other wall street backed scam
US oil production may have started shrinking already:
http://www.wsj.com/articles/north-dakota-crude-production-falls-from-rec...
ever been to North Dakota in January....there might be other reasons production fell. These guys are all in....if you have a company you don't slow production 3% to help out the other guy. These people are trying to make bond payments....and will pump all they can...Saudi is pumping, Canada is pumping....this is gamesmenship!
We'll find out. Just keep in mind that the Bakken needs 90-100 new wells per month to keep production constant.
Well, did production fall in all previous Januaries?
Since 2010 it's increased 4 out of 6 years. This year and 2013 were the only times it didn't increase.
Or does production of oil fall in Canada or Russia every winter, places where it's even colder than North Dakota.
not fast enough if you're long the oil patch
Can someone please explain how Last December we hit below 2$ at the pump and now with Oil at 45$ its around 2.20?
I don't get? Are they waiting to get rid of excess inventory before lowing prices? FIFO?
The oil glut is pure bullshit.
For people who aren't in the industry, or not tracking the real data, and only looking at the news media...its confusing (news media...of course its nuts).
The real data is that the US is now producing about 9 million Barrels(Bbls) of oil a day....up from 6 million Bbls a day a few years ago. Seems like alot, right? a 50% increase. Except that in our heyday in the US we produced about 12 million BBls a day and we've been in decline ever since. This shale bump is helping, but not that much...its a blip on the radar screen.
The US consumes about 20 million Bbls a day. So do the math! We import the rest. So how do you get a glut out of this? How are our storage tanks filling up?(they are really only 50% to 67% full), and why are prices plunging because of the Non-Glut?
Want more of a headache? Global oil consumption is almost 100 million Bbls a day. The US consumes 20 million of that each day. Plus its illegal in the US to export oil...and the rest of the world is not gaining any gains from shale oil...and global demand for oil increases every quarter...so how the hell is their an oil glut anywhere else in the world? And don't forget that there are over 3 million BBls a day offline through out the Middle East due to wars everywhere over there...so that's 3 million Bbls less per day.
Last point...its not the Saudi's that are trying to stop shale...another bullshit myth from the Media. Its the US of A trying to face down Russia since sanctions had little to no effect on Russia...but chopping oil prices in half did. The Saudi's are merely the lapdog of the US and CIA(the Saudi's are takign the blame - and the US stays out of the line of fire with Russia over the quashed oil prices)...and will go along with us since we are their security...or they'd all be speaking Persian(or Farsi) tomorrow. Obamba has "lost face" to Putin at every turn(rememeber Obamba wanting to go to war with Syria a year ago...until Putin stepped in at the 11th hour and took any chemical weapons Syria had...no more WMD's...no more war)...so the Whitehouse is hell bent on a cold war with Russia until they cry "uncle"...which we know Russia will not do.
In the meantime oil prices willl stay manipulated and suppressed...but for only so long...and then the pressure cooker system will blow out some where else. Its already hitting the global financial markets, banking, and currency. By year end oil prices will be higher...because there is No Glut!
The Dollar is also being manipulated to suppress oil prices artifically.
Just look at a chart with UUP compared to USO.
They are diametrical opposites. Since last summer UUP is up over 25% and oil is down over 50%...they have almost moved in lockstep. Dollar up...Oil down!
So the manipuation of oi prices in order to drive down Russia's #1 source of income continues. That is the focal plane that you have to look through in order to understand what is going on in the world.
Of course when the Dollar corrects one day...so will Oil.