Oil prices vs Rig count https://encrypted-tbn2.
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Posted On: 12/30/2014 2:41:21 PM
Oil prices vs Rig count
It’s no surprise that the number of U.S. oil rigs moves up and down with the price of oil, but the chart above offers an interesting glance at the relationship.
Baker Hughes BHI, -0.35% on Monday said the total number of U.S. rotary rigs fell by 35 to 1,840 in the week ended Dec. 26, the fifth consecutive weekly decline, bringing the total to its lowest level since April.
“If OPEC’s goal is to slow U.S. oil production by dumping cheap oil into our market, they are having some success,” said Phil Flynn, senior market analyst Price Futures Group in Chicago.
The Organization of the Petroleum Exporting Countries in November accelerated oil’s free fall when it refrained from cutting crude production. Saudi Arabia’s oil minister said earlier this month that a plunge to as low as $20 wouldn’t be enough to prompt a production cut. The move has been described as a price war aimed primarily at North American shale producers, who had responded to high oil prices by ramping up production in recent years at a breakneck clip.
Oil’s slide, which has seen Nymex futures CLG5, +0.82% the U.S. benchmark, fall 50% from their June high above $107 to trade at five-and-a-half year lows below $54 a barrel, has been the fastest since 2008.
That means rig counts will continue to decline, but the impact on supply will likely take “weeks if not months” to be reflected in hard production figures, said analysts at Commerzbank.
It’s no surprise that the number of U.S. oil rigs moves up and down with the price of oil, but the chart above offers an interesting glance at the relationship.
Baker Hughes BHI, -0.35% on Monday said the total number of U.S. rotary rigs fell by 35 to 1,840 in the week ended Dec. 26, the fifth consecutive weekly decline, bringing the total to its lowest level since April.
“If OPEC’s goal is to slow U.S. oil production by dumping cheap oil into our market, they are having some success,” said Phil Flynn, senior market analyst Price Futures Group in Chicago.
The Organization of the Petroleum Exporting Countries in November accelerated oil’s free fall when it refrained from cutting crude production. Saudi Arabia’s oil minister said earlier this month that a plunge to as low as $20 wouldn’t be enough to prompt a production cut. The move has been described as a price war aimed primarily at North American shale producers, who had responded to high oil prices by ramping up production in recent years at a breakneck clip.
Oil’s slide, which has seen Nymex futures CLG5, +0.82% the U.S. benchmark, fall 50% from their June high above $107 to trade at five-and-a-half year lows below $54 a barrel, has been the fastest since 2008.
That means rig counts will continue to decline, but the impact on supply will likely take “weeks if not months” to be reflected in hard production figures, said analysts at Commerzbank.
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