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Rising Oil Prices Lift Rig Counts

Sean Coakley January 26, 2018

Today’s weekly count of drill rig activity from Baker Hughes saw an increase of 11 rigs operating in United States, 13 in Canada, and 12 outside of North America.

Rig Numbers & Change From Prior
United States      947 + 11
Canada                 338 +13
International       954  +12

While signaling a departure from the tepid levels of activity seen in the last few months, today’s data suggests that manic price action and consistently-larger-than-expected crude drawdowns have done surprisingly little to inspire new drilling activity.

Outside of the relative absence of net new wells, market commentators may point to the abundance of drilled-but-uncompleted wells, particularly in the Permian basin, but this may present a false economy. Against a background of continued economic growth and OPEC cuts, it’s looking more and more likely that the physical supply of crude is tightening far faster than many anticipated.

Bottom Line: Both Brent and West Texas Intermediate benchmarks remain in the ascendant, taking the Canadian dollar higher along with them. Although the long oil trade has become increasingly crowded, and we may see a technical pull back in the short term, both momentum and rapidly declining supply look set to keep the oil bulls on parade.

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