Week Ending May 1: US Rig Count Is the Lowest since June 2009 (Part 3 of 10)
(Continued from Part 2)
Oil rig count decreased
Baker Hughes (BHI) is an oilfield services company. It reported that the US crude oil rig count decreased by 24 for the week ending May 1—compared to the previous week. It was down from 703 to 679. The number of oil rigs is now at the lowest level since September 24, 2010.
The steepest decline in oil rigs since 1990 occurred on January 30, 2015. The weekly oil rig count decreased by 94.
The latest figures mark 21 consecutive weeks with a fall in the number of active crude oil rigs. In those 21 weeks, the crude oil rig count crashed by 896.
Among the major resource shales, the main reductions occurred in the Permian Basin located in western Texas and southern New Mexico. It’s important to note that seven oil rigs were idled in the Permian last week. Also, in the Eagle Ford in south Texas, the oil rig count declined by seven. In Part 4 of this series, we’ll discuss the Permian Basin rig count in more detail.
The crude oil rig count fell by 930, or 58%, since it hit 1,609 rigs on October 10, 2014. That week, the crude oil rig count was the highest since January 2005.
Producers are at risk
Crude oil’s price fell sharply since June last year and continued to stay low. When oil prices continued to dip, oil producers like Whiting Petroleum (WLL), Denbury Resources (DNR), Concho Resources (CXO), and Marathon Oil (MRO) took a hit. Together, Marathon Oil and Concho Resources account for 2.6% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).
To explore the latest crude oil price movements, please read Crude Inventories Set the Stage for Bullish Crude Oil Prices.
One-year oil rig count comparison
For the 12 months ending May 1, 2015, the number of oil rigs in operation dropped by 848, or ~56%. Activity in the oil-rich Permian Basin in west Texas drove most of the decrease. In comparison, the numbers grew by 124 during the same period last year.
Continue to Part 4
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