Idling Rig Count Resumes... More Foreign Oil (BHI, USO)

Baker Hughes Inc. (NYSE: BHI) is out with its weekly rig count.  Last week we thought that we were getting close to equilibrium on the supply and demand equation because we were starting to see a small sense of stabilization in the U.S. and Canadian rig counts.  It looks like that just isn’t the case.  We are back to a drop off in the rig counts.  The good news is that the United States Oil ETF (NYSE: USO) hasn’t done much.

U.S. Rig Count is down 30 from last week at 975; down 852 year over year.

Canadian Rig Count down 9 from last week at 74; down 22 year over year.

The US Offshore rig count is 47, down 1 from last week; down 16 year over year.

We’ll need to see next week if that continues to see if we really go lower.  Even if you adjust for seasonal trends and take the oil prices being less than half of last year’s highs, it looks like the U.S. is going to be bringing in more and more foreign oil.

Based on massive storage build-ups, you have to wonder if the rigs that are operating are working overtime.  It seems that the demand destruction is more than real.

JON C. OGG