Weekly U.S. Oil Rig Count: Here We Go Again

| About: The United (USO)

Summary

Total U.S. rig count (oil and gas) increased by fourteen.

Total U.S. oil rig count increased by eleven.

The horizontal count increased by fourteen.

Eleven new oil rigs in the Permian.

A lot of new oil rigs, all of them horizontal and all of them in the Permian. As we have mentioned before, the Permian is the preferred basin to add new rigs at the current price level. If oil eventually starts to approach the $60/bbl level, then we should see a boom in new rigs in some of the shale plays.

Crude oil prices (NYSEARCA: USO) went on a rollercoaster during the week and climbed above $52/bbl for the first time in several months after the EIA inventory report was released on Wednesday.

Source: Finviz.com

Data:

Source: Baker Hughes

*Total U.S. oil rig count increased by eleven with all of the new rigs located in the Permian. We should see the rig count increase during the fall, as we believe that the floodgates are wide open at this moment. In total, the oil rig count has increased by 40% since the bottom in late May.

* Horizontal rigs increased by fourteen this week. Eleven of them are oil rigs, and three are natural gas rigs. In total, the horizontal rig count has increased by 42% since the bottom in late May.

* Directional as well as vertical rigs remained unchanged for the week

* Natural gas rigs increased by three, after an eleven rig increase last week.

Source: Baker Hughes, Orangutan Capital

*The Permian oil rig count increased by eleven during the week. As we have mentioned before, at the current $50/bbl price level, the Permian continues to be the preferred basin to add new rigs. To date, the rig count in the Permian is up by 61% since the April 2016.

* On a net basis there was no change in DJ-Niobrara and Eagle Ford, both shale producing regions

* One new oil rig in the Mississippian basin.

* No new rigs in the GOM.

Conclusion:

Quite a lot of new rigs added in the Permian this week and many more that should be added in the coming weeks as long as the price of crude oil stays around $50.00/bbl. With the ECB meeting now out of the way, we see the weekly EIA reports, which continue to show large crude oil draws during the shoulder season, as well as the upcoming OPEC meeting in November, as the most likely catalysts for crude oil prices going forward.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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