"Baker Hughes (BHI) reported that the oil rig count declined by 31 for the week ending April 24 to 703 from 734 the previous week. The overall active rig count (932) hit the lowest mark since October 2010. Baker Hughes expects the number of active rigs to drop more by 350 by the end of 2Q15.
Their forecast of another 350 rigs being dropped implies the number of rigs drilling for oil will drop below 500. That is below my forecast of 600 oil rigs by the end of June. If this happens, U.S. oil production will be falling by 200,000 barrels per day each month in the 4th quarter.
If this happens, I think WTI is heading back to $100/bbl by early 2016.
Keep in mind that once oil production in a region goes on decline it is very difficult (and expensive) to reverse the decline.