U.S. oil rigs continued to get hammered this week despite
still-rising levels of production.
Drillers idled 98 rigs,
dropping the number to 1,358 and marking the 10th consecutive decline,
Baker Hughes reported on Friday. The total U.S. rig count is down 30 percent
since October, an unprecedented retreat.
The collapse in oil
prices has wiped out more than 100,000 oil jobs worldwide. That hasn’t shown up
yet in U.S. jobs numbers, and American oil production is at its highest
seasonal levels in decades. Still, there’s mounting anecdotal evidence of an industry in distress,
and the rig counts appear to be in free fall.
Rig counts are a
controversial signal for U.S. oil watchers. Some see it as a leading
indicator of production. Rigs are used to explore for new deposits and to drill
new wells, so when rig counts decline, that will inevitably affect production
down the line.
On the other hand, rigs
have become more efficient, U.S. shale wells have been more prolific, and the
rigs being idled are often the least productive. It’s possible that despite the
plunging number of active rigs, U.S. production will continue to be slow
to respond.
Is the U.S. Drilling
Frenzy Over?
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