More unraveling in rig counts

  • Horizontal oil rig counts fell again this week, -2 to 769
  • Total oil rigs were flat at 863
  • The 4 wma for horizontal oil rig adds fell to +1.0 / week
  • The breakeven to add rigs appears to have risen to $65 / barrel WTI, with an outright decline in rigs counts expected from August given recent oil prices.
  • The July Drilling Productivity Report (DPR) continues to show excellent production gains from the major plays, with yoy growth at 1.6 mbpd, of which 0.9 mbpd (68%) comes from the Permian alone.
  • Compared to May, the DPR sees June shale oil production up 124 kbpd, 68 kbpd (55%) of this from the Permian
  • In short, the data suggest excellent production growth, but reluctance by operators to commit additional rigs, even at ostensibly favorable oil prices.
  • Q2 GDP
    • NY Fed: 2.8% (+0.0% from last week)
    • Atlanta Fed: 4.5% (+0.7% from last week)