Horizontal rig counts rose by 6 this past week, closing the best four week stretch in a year. WTI at $90 appears sufficient to bring incremental rigs into operation. Alas, oil prices have been dropping for the last several weeks, and while we may still see rig gains next week, counts should start to fall as we head towards year-end. Indeed, they should fall at a fairly rapid pace into January, assuming our breakeven analysis holds up.
Rig counts
Total oil rig counts: +5 to 505
Horizontal oil rig counts: +6 to 457
The Permian horizontal oil rig count: +3
The US horizontal oil rig count is rising at a pace of +3.50 / week, the best in a year
Frac spreads fell, -5 to 276
DUC inventory, as measured in days of turnover, fell to a new low of 12.4 weeks
More rebalancing of the rig-to-spread ratio is required; this week is suggestive of trends to come, with rigs rising and spreads falling
The Brent Spread (Brent – WTI) remains near $5 / barrel, suggesting US production growth remains solid