Oil Drillers Pull Most U.S. Rigs in More Than Two Decades
January 9th, 2015Disclosure: I’m long USO/oil.
Via: Bloomberg:
In what is the strongest sign yet of the damage that plunging crude prices are doing to the U.S. oil industry, drillers idled more rigs last week than they have at any point since 1991.
Oil rigs fell by 61 to 1,421, Baker Hughes Inc. (BHI) said on its website today, extending the five-week decline to 154. The 2014 peak was 1,609. It was the largest drop since February 1991, which also followed a tumble in prices before the start of the Persian Gulf War.
The price of U.S. benchmark West Texas Intermediate oil has plunged by more than half since June, imperiling a shale boom that has brought the nation closer to energy independence than it has been in almost three decades. U.S. drillers laid down the most rigs last quarter since 2009 as the Organization of Petroleum Exporting Countries and the rest of the world’s suppliers maintained production.
“Unless oil prices recover, absolutely, this is the end of the drilling boom,” James Williams, president of energy consulting company WTRG Economics in London, Arkansas, said by telephone today. “The total rig count should hit 1,000 by March or April, and oil production growth should be flat or declining by mid-year.”
West Texas Intermediate for February delivery fell 43 cents to settle at $48.36 a barrel on the New York Mercantile Exchange, down 47 percent in the past year and 55 percent from the peak in June. Brent, the international benchmark, dropped 85 cents to $50.11 on the London-based ICE Futures Europe Exchange.
