For the past 12 months, the U.S. onshore rig count has risen by 176, but there were nine fewer rigs operating week-over-week as of Friday’s count. The data come from Baker Hughes Inc. (NYSE: BHI) and the totals include a few miscellaneous rigs.
It may be too early to declare that falling prices for crude are having an impact on drilling, but it is not too early to start paying attention to the weekly reports from Baker Hughes. West Texas Intermediate (WTI) crude oil for November delivery closed at $89.71 a barrel Friday, down nearly 1.4% on the day and less than $2 a barrel from the 52-week low of $87.85 a barrel.
Over the past three months, the price has dropped by about $12 a barrel. That kind of drop is a disincentive to producers, who see a signal that the price is in free fall with no floor in sight — or at least no floor that will give the producers a profit.
In the same vein, crude oil production fell by 30,000 barrels a day in the week ending September 26, according to the U.S. Energy Information Administration (EIA). Imports rose week-over-week but were down by nearly 700,000 barrels a day year-over-year.
We have noted before that if crude oil prices fall far enough, producers could just leave the oil in the ground until the price rises. We’re not at that point yet, and we may never be, at least in the near term. But rig counts are kind of a canary in a coal mine — just look at the difference between the gas rig count in 2011 and today — down two-thirds, about the same as the drop in natural gas prices.
ALSO READ: Crude Oil Price Tumbles Below $90 on Saudi Price Cuts
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