A lot of new oil rigs in this report, including five new horizontal rigs. If last week's rig repositioning indicated that producers were ready to put some capital at risk, this week's increase in the oil rig count indicates that $50 barrel oil will likely become the level above which producers will put new rigs into play, and below which they will return to hibernation. Despite the likely increase of oil rigs in the following weekly reports (assuming that oil stays at the $50/bbl level), we don't think that $50 will necessarily become a ceiling for oil prices as the driving season may provide a continuous stream of positive news flow.
Crude oil prices (NYSEARCA:USO) remained mostly unchanged after the report.
* Total U.S. oil rig count increased by nine. Although not that large compared to the 2009-2014 period, this weekly increase is still the third largest increase in the oil rig count since July 2015.
* Horizontal rig count increased by five. A meaningful development, since horizontal rigs are more productive and expensive to operate.
* Natural gas rigs declined by five, helping lower the total U.S. rig count to four.
By: Orangutan Capital.
Photo 1: Finviz.com
Photo 2: Baker Hughes.
Review: Emerging Market Formulations &
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