Energy Prospectus

The number of active rigs in North America dropped by another 4 this week. Each drop sets a new record low. The current active rig count is the lowest in the 70+ years that Baker Hughes has been reporting it. We are probably nearing the bottom, but we could see it drop below 400 this quarter (from 440 today). IMO we need an oil price of at least $50/bbl before there will be any increase in the active rig count.

United States
> Rigs drilling for oil down 3 to 351, compared to 734 a year ago and 1,609 in October, 2014
> Rigs drilling for gas flat at 89, compared to 217 a year ago.

Canada
> Rigs drilling for oil = 10
> Rigs drilling for gas = 30
Canada's upstream business is almost shut down. They will have less gas to send the U.S. next winter adding to what is looking more and more like a much tighter U.S. gas market next winter.

For a stark reminder of the cyclical nature of the oil business, the total U.S. working rig count for this same week in 2014 was 1,831. Today’s total represents a 76% decline from then.