The rig and spread counts are seeing both regime change and seasonal variation
Horizontal oil rig counts appear to have stabilized in the mid 450s, essentially unchanged in the last two months.
This represents a new regime in the shale patch, as counts had been falling steadily throughout 2023
Frac spreads have rolled off heavily over the last four weeks, down 32 since early December.
Most of this can be attributed to seasonal factors, but the effect has been to stem the erosion in the DUC inventory witnessed over the last several years.
On seasonal trends, spread counts may be expected to recover over the next several weeks, leading to a renewed erosion in DUC inventories.
We continue to see a disparity between the EIA and media reports with respect to production growth.
The media frequently refers to surging US oil production, and that is certainly true considering 2023 as a whole.
However, the EIA sees US shale oil production peaking in October 2023, with modest declines to be expected over the next several months.
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Rig counts
Total oil rig counts: +1 to 501
Horizontal oil rig counts: +1 to 457
The Permian horizontal oil rig count: +3
The US horizontal oil rig count is rising at a pace of +0.5 / week
Frac spreads fell, -4 to 236, the lowest level in more than two years
DUC inventory, as measured in days of turnover, rose to 16.1 weeks on seasonal factors
Based on last year’s precedent, expect the spread count to recover and inventory to fall back towards 14 weeks