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Energy

Lower Oil Begets Lower Rig Counts… Again (BHI, USO, OIL)

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By Douglas A. McIntyre Updated Published
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It looked for a moment as though the oil and gas rig counts were finally stabilizing.  Prices had recovered sharply from lows and were challenging $70.00.  But as you can tell, this is all in the past tense.  Baker Hughes Incorporated (NYSE: BHI) has released its newest data on rig counts.   The United States Oil (NYSE: USO) ETF is down 1.3% at $32.33 and the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) is down 1.3% at $21.15 as oil itself is down by $075 to $59.66 per barrel for NYMEX WTI Crude.

The end of month data was a bit mixed and perhaps a bit misleading because there had been a trend of stabilization.  But the new count reflects the data as of July 9 as oil prices have slid further from last week:

U.S. Rig Count is down 12 from last week at 916; down 1,006 year over year.

Canadian Rig Count is up 13 from last week at 178; down 236 year over year.

The US Offshore rig count is 37, down 5 from last week; down 30 year over year.

For T. Boone Pickens to be right on his call for higher oil in 2009 to 2010, we’d think that oil rig activity would have to be higher.  The problem with the logic is that this is a chicken versus egg conundrum.  Rig counts grow when oil prices rise, and the rig count direction generally lags the movement in prices.

Jon C. Ogg
July 10, 2009

Contact [email protected] for any questions or corrections.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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