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Rig Count Plunge Continues: Total Rigs Lowest Since March 2011, Fastest Drop Since 1986
There was good and bad news for those oil bulls (and inversely, bears) in today just released Baker Hughes rig count.
The good news - for the bulls - is that the rig collapse continues, with "only" 1,069 rigs currently operating, down 5.0% from last week's 1,125, and the lowest since March 2011. The hope (because lately that's all there is) is that since oil rigs are plunging at an annual pace last seen 1986, that sooner or later production will be mothballed. However, as the blue line in the chart below shows, quite the contrary is happening as plummeting oil rigs simply means even more record production.
As for the good news for the bears, the latest weekly drop of 56 indicated the first slow down in the weekly decline, following last week's 67. If this is the start of a trend, it may well mean that drillers are taking full advantage of gullible BTFD equity and bond investors, and are throwing all they can at the oversupply problem by... supplying even more oil.
If indeed the weekly drop in the rig count next week slows down dramatically, watch out as Cushing overflows, and oil starts to be liquidated en masse as the US runs out of storage capacity in just about 2 months.
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And as a parting reminder, here is Bloomberg to explain the 'link' between wells, production, and rigs:
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This game is rigged too..
I see what you did there.
Oil rig count going parabolic down, market rig(ging) count going parabolic up.
How many people are currently employed in the oil industry?
-Matt
http://www.MrDryOut.com
Is this a trick question?
Pump, fuckers, pump. You just might make next month's interest payment!
Not in the Bakken, Tyler.
https://www.dmr.nd.gov/oilgas/stats/statisticsvw.asp
And within six months, not anywhere else in the USA, either.
those numbers only thru january ... my calendar says march
January (data released 3/13/15) is lower than December and basically flat since September. Do you expect February and March to be higher in the Bakken? Could be, but only if more wells per rig. Except for December, that's not the trend in the Bakken the last six months.
WTI was $80s barrel thru november
january not really long enough for cutbacks to feed thru
expect rig count to drop as oil marches toward $30s
Bakken's January figures could be an anomaly, and production may continue to increase. It's not my view, though. Bakken production even stalled back in October/November with the higher WTI.
Bakken production almost always takes a breather during the cold months.
Point taken, but January 2014 was higher than December 2013.
No one knows production figures for March or February or even January. At least nationwide.
People who keep repeating that shale oil production is still surging ahead are basing themselves on the ever optimistic estimates of the EIA.
Despite all the media noise and the propaganda from the shale industry etc, there is not one in a million chance that the price fall we have been experiencing during the past few months will not seriously dent shale oil production, as well as tar sands production in Canada.
The fall in the oil price is still extremely recent (up until November the price was over $80 if I am not mistaken) and there is of course a certain lag between the oil price and the rate and mass of investment, and from there on then, an even further delay between a fall in investment and a fall in consumption.
I just need someone to explain to me why gas prices near me shot UP by 70 God damn cents a gallon this week!! No reason cost wise that I can see....
inflation
Because someone needed some money.
because........Yes we can
Inventories not as high as crude? You can check the EIA report on Wednesday mornings.
whats wrong with that? They need money...
Because...obama
Check with your local state gubbermint. They L-L-LOOOOVE cranking the gas tax whenever they get a chance. This seems like a perfect time for it, given how 'dramatically' prices have fallen, and hey....since the peasantry is already used to $3 per gallon gas, they wont feel this latest pummeling as much.
Besides....dont you want to drive on good roads and have continued access to the wonderful services your gubbermint provides? We don't wanna have to lay-off cops and teachers, you know! For da chilrenz!
Still more than 1000 and remember, that number is rigs STILL punching holes in the ground, so the fun ain't over yet.... Does Yellen count as a fat lady and can she sing???
Good point. Wonder is there is a wells per rig stat?
In the 4 county sweet spot of the Bakken, here in North Dakota, each one of those rigs is punching on average 4 bores per pad; 5 years ago it was hardly even heard of in terms of multiple bores; one rig, one hole. Continental Resources has some rigs in McKenzie County poking 6 bores per pad; it takes only 24 hours to "slide" a rig over 50 feet and start drilling again.
FYI
It really depends on what your drilling through and permit allowances but more holes per pad is a good thing if your a driller.
"and are throwing all they can at the oversupply problem by... supplying even more oil."
In Amerika We Bust
No choice, gotta pump at ramming speed to make the monthly mortgage payment. The more the price falls, the more you have to pump to come up with the payment.
exactly ... and cutting production risks losing leases (payments based on production royalty)
Agreed, but not for too much longer.
Play this forward: rig reductions = production reductions = supply reduction = higher forward pricing.
Keep pumping. Nothing fixes underdemand like doubling down on oversupply. Just ask the ECB.
They are just making sure that once dead, the US oil industry will stay dead... for good.
Worst since 6th Golden Raspberry Awards: Rambo: First Blood Part II wins
http://finance.yahoo.com/news/u-set-fracking-standards-federal-142213063...
More than 40% of fracking rigs were fake in the first place, barely anyone was "pretending" to work there, There was obviously no production from them therefore so far there was only moderate loss of jobs and increase, instead of decrease of production, but it will change soon.
Top producing sites doubled or tripled output volumes to make up for 60% PRICE COLLAPSE now in range of $30-$35, which means most of wells will be depleted in 9-12 months causing permanent destruction of the sites due to too high rate of production. Those companies which already ran out of oil or gas, hide this fact and desperately trying to sell shares in last gasp of breath before liquidation. They were shut out of credit market at least 6 months ago.
The oil giants already left most of fracking fields keeping few still producing anything for show, while secretly turned into green fanatics supporting various legislatures to ban fracking, just for cover of their reversal of investment strategy.
Honest take on the shale ponzi scheme I found at:
https://sostratusworks.wordpress.com/2015/01/15/the-shale-game/
Tyler you need to make up your mind, are people gullible who BTFD, or is that the only sensible thing to do? Or are you simply referring to the energy space? Or are you deliberately being vague so in your mind you can never be wrong? All of the above? Ah, got it
The American bank bail out was a even worse ratio But who are we going to complain to.