BH Week of July 27: A local peak in rig counts

  • A clear local peak in oil rig counts
  • Total oil rigs rose, +3 to 861
  • Horizontal oil rigs were flat at 762
  • The 4 wma change for horizontal oil rigs came in at -0.75 / week.  Expect this number to deteriorate next week.
  • Horizontal oil rigs are showing a clear local peak, similar to last July.  By the time the count bottomed in November, horizontal oil rigs had fallen by 32.  The difference is that oil prices were $20 / barrel lower then. 
  • Our model sees falling horizontal oil rig counts through Labor Day.
  • Frac spreads have also peaked and are looking weak relative to rig counts. 
  • Animal spirits are flagging, even if production growth remains strong.
  • Q2 GDP
    • The BEA advance estimate for Q2 GDP came in at 4.1%
    • NY Fed: 2.8% (+0.1% from last week)
    • Atlanta Fed: 3.8% (-0.7% from last week)
    • Overall, the Atlanta Fed seems to be the superior approach, but neither method is entirely satisfying