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Crude Slips After Oil Rig Count Surges By Most In 15 Months
Total US rig count increased a somewhat stunning 19 last week to 876 - the highest since May. This is the biggest rise in rig count since August 2014. The oil rig count surged 21 to 659 - this is the biggest weekly rise since April 2014.
- *U.S. TOTAL RIG COUNT UP 19 TO 876 , BAKER HUGHES SAYS
- *U.S. OIL RIG COUNT UP 21 TO 659 , BAKER HUGHES SAYS
Louisiana (up 7) and Texas (up 8) saw the biggest increases.
The jump in total rig counts was big:
But oil rig counts surged by 21 - the most since April 2014.
The reaction - crude is sliding even further.
Charts: Bloomberg
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I'm not entirely convinced that these numbers are any more accurate and/or honest than the BLS employment numbers.
J
Why would Baker Hughes provide imaginary numbers showing an increase in rigs? Are they short their own stock?
Methinks he tried to catch the falling knife
The numbers are good and rig counting is easy. There's still good places to drill but this might be a lease thing........
Did you believe the numbers when the rig counts were plunging?
Fair question.
I accepted it because with oil prices crashing, rigs shutting down made sense. Rig count rising in the face of sub $50 doesn't.
But I mainly question them because, with each price manipulation revelation and admission (metals, indexes, rates), I'd be foolish not to suspect any and all "official" and "non-official" market moving numbers.
Rigs are ordered months in advance, so these rigs were likely leased when WTI was around $60 in April-June. Cancellation penalties are up to 75% of the total lease contracts. These frackers had no choice but to put the rigs into service. They are all bleeding cash and they can keep producing oil or else they can file bankruptcy. Another problem is when they lease the land, they have a certain amount of time, usually 5 years, to start operations or else they lose the contract and money. You can't just lease the land to drill for oil and then sit on it for 20 years. The landowner wants his royalties in a reasonable amount of time, not a decade after he's dead.
Remember, many analysts and oil company CEO's were expecting $80 oil by this fall.
Just like everything else, it just depends on when the banks decide to let it go. Should be interesting to see who the shale boom's Lehmans are going to be. This is Enron gone national. Chapter 11 Bitchez.
or when the regulators tell the banks to cut off the credit lines
that's starting to happen now
http://www.wsj.com/articles/banks-facecurbs-onoil-gaslending-1435866277
Regulators Warn Banks on Loans to Oil, Gas Producers Move could limit ability of energy companies to obtain financingU.S. regulators are sounding the alarm about banks’ exposure to oil-and-gas producers, a move that could limit their ability to lend to companies battered by a yearlong slump in prices.
The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. are telling banks that a large number of loans they have issued to these companies are substandard, said people familiar with the matter, as they issue preliminary results of a joint national examination of major loan portfolios.
The substandard designation indicates regulators doubt a borrower’s ability to repay or question the value of the assets that back a loan. The designation typically limits banks’ ability to extend additional credit to the borrowers.
The move could add an extra obstacle to companies struggling with high debt loads amid lower prices for the oil and natural gas they produce. Banks have been flexible with troubled energy companies to avoid triggering a flood of defaults and bankruptcy filings, but regulatory pressure could force them to tighten the purse strings.
Crude walking $60 like it did seems like manipulation to let the chosen people get off this titanic. What a farce.
The beatings will continue until the banks stop lending.
OAS and WLL are about to be gone with the wind.
OAS and WLL are about to be gone with the wind.
These may be considered boom times once the iranian production openly returns to the market