Baker Hughes Inc. (NYSE: BHI) has its weekly rig count out, and we are still losing rigs in the oil and gas sector. Somehow our inventories keep building to near-record levels. The answer is simple. We are as dependent upon foreign oil as ever. If you listened to the oil conference calls this week you might wonder just how high oil has to go for new rigs to be profitable enough that we get some of these rigs back on line. So far, the United States Oil (NYSE: USO) ETF is very close to the highs of the day up 3.6% at $28.90.
U.S. Rig Count is down 20 from last week at 955; down 887 year over year.
Canadian Rig Count down 9 from last week at 65; down 23 year over year.
The US Offshore rig count is 51, up 4 from last week; down 16 year over year.
The good news is that we are at least starting to see some increases occasionally. This follows the notion that a bottoming of the rig counts dropping each week is at least closer rather than farther away. At least that is how we feel if oil prices can remain firm. If we get back into $30’s in oil, forget about that notion.
Oil tankers are still being used as storage for oil. And our inventories keep growing. With a recession and unemployment heading to possible double-digits you know that demand destruction is real. There is always the notion that there is some seasonality that helps to explain this. For now, these numbers will have to speak for themselves.
JON C. OGG
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