OPEC's Meeting: Price Wars Continue in the Global Crude Oil Market
Crude oil rig count
On December 4, 2015, Baker Hughes (BHI) published its weekly US crude oil rig count report. The US crude oil rig count fell by ten to 545 for the week ending December 4, 2015. The active crude oil rigs fell for the third consecutive week for the week ending December 4, 2015. In the last ten weeks, the US crude oil rig count fell by 97 rigs as of December 4, 2015.
Impact
The oil producers are still less optimistic about the higher oil prices. That’s why they’re idling the crude oil rigs. In the last two weeks, 19 oil rigs have been idled. The drilling activity fell due to the fall in the crude oil prices. As a result, it negatively impacts US oil drillers like Baker Hughes, Schlumberger (SLB), Superior Energy Services (SPN), and Halliburton (HAL). Baker Hughes, Schlumberger, and Halliburton laid off 51,000 employees since June 2014. During the same period, the global oil and gas companies laid off 200,000 employees.
Currently, the US crude oil count fell more than 65% from the level of 1,572 rigs last year. The US crude oil rigs peaked at 1,609 in October 2014 and bottomed out at 545 rigs on December 4, 2015. In its monthly drilling report, the EIA (U.S. Energy Information Administration) suggested that US production could slow down in December 2015. It also suggested that the US drilling activity could slow down. The slowing production could benefit oil prices.
ETFs like the First Trust Energy AlphaDEX Fund (FXN) and the iShares US Oil Equipment & Services ETF (IEZ) are also impacted by the volatility in the oil market. In the next part of this series, we’ll discuss crude oil price trends.
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