A slowly unwinding situation

  • Total US oil rigs fell 1 to 862 last week
  • Horizontal oil rigs added 2 to 767
  • The 4 wma for horizontal oil rig adds fell to 3.0 / week, as forecast
  • The appetite to add rigs seems to be waning, as we noted last week, and a new interim peak may be forming.
  • This in turn suggests the breakeven price to add oil rigs is rising to about $60 / barrel WTI, up from around $48 / barrel a year ago.
  • Oil prices recovered on the OPEC deal – no surprise – but seem weak again today. 
  • The Brent spread has closed to $6 / barrel, with weakness in Brent.  Not clear what it means, but we would expect to see this if supply overruns demand.  Too soon to make a call, though.
  • Q2 GDP
    • NY Fed: 2.9% (-0.1% from last week)
    • Atlanta Fed: 4.7% (-0.1 % from last week)

Baker Hughes Rig Count Week of June 22