Active Rig Count falling fast

[dan_s]

Baker Hughes reports that the U.S. active rig count dropped by 74 for the week ending January 16th to 1,676. This is one of the largest drops I have ever seen. I now expect the active rig count to drop by 50 or more each week until it drops below 1,000.

The number of rigs drilling for oil dropped 55 to 1,366. I expect it to drop to under 700.

Once the number of rigs drilling for oil drops below 1,000 we are sure to see U.S. production begin to fall a few months later. I expect U.S. oil production to be on decline late Q2 or early Q3. At about the same time, global demand for oil will be increasing. See: https://www.iea.org/oilmarketreport/omrpublic/

[dan_s]

Brent crude oil rose more than $2 to reach a high of $50.36 yesterday on news from the International Energy Agency (IEA) that there are signs of prices taking a turn up in the future. In its Oil Monthly Report (OMR), the IEA said, “How low the market’s floor will be is anybody’s guess. But the selloff is having an impact. A price recovery – barring any major disruption – may not be imminent, but signs are mounting that the tide will turn.”

The message from the IEA that boosted prices on Friday was that low oil prices are starting to have an effect on production, lowering output around the globe.

Read This: http://www.oilandgas360.com/prices-jump ... 4-26401157

[setliff]

did ya notice that canada added the same number, 74, of rigs?

[dan_s]

Rig count in Canada always goes up in the winter. They are not the same kind of rigs. Most are drilling shallow gas wells. Remember, Canada does not have the kind of shale plays we do.