Falso Hope | Russell T. Rudy Energy LLC
“World Oil” reports that as of last Friday, the number of rigs looking for oil increased by 21 to 650 according to the Baker-Hughes count. This was the largest increase in oil rigs in 15 months. Recently, the count has been on the rise in three of the last four weeks, but is still well below the October 2014 level of 1,609.
Many industry observers opine that these increases are the result of crude oil prices previously stabilizing at around $60 per barrel. As rig counts dropped, traders bid up the price of oil anticipating that fewer rigs would soon result in lower production rates, and reduced supplies. However, production rates proved more resilient than expected and prices began to slide. This drop was exacerbated by the Iran nuclear agreement and the specter of production from that country flooding the market.
In my opinion, the recent increase in oil rig count, just as prices began sliding again, is attributable to the time lag between price fluctuations and rig deployments. If I am correct, the recent price drop will ultimately result in lower oil rig counts yet again. I hope I am wrong.
To read the article in its entirety, please go to http://www.worldoil.com/news/2015/7/24/false-uptick-baker-hughes-us-oil-rig-count-rises-by-21 .
