EIA today announced that oil production in the Bakken and Eagle Ford will be down 31,000 and 47,000 respectively. This information coupled with the fact that inventories in Cushing are decreasing. Not too long ago, everyone was wondering where we would store all this oil. No one is wondering any more.
Last week at OTC, everyone was talking like $65 would be the price that drilling would pick up. With today’s price of crude surpassing $61, we may not be too far off.
If we are near the tipping point, when is the tipping point? From my perspective, when the Baker Hughes U.S. rig count is over 1000 rigs, the recovery in drilling will be taking place. Last week, the rig count was 884. Not that I have drawn a line in the sand on the rig count, the question remains when. Since we are looking for 13% increase in the U.S. rig count, my forecast is that by September 1st the U.S. rig count will be in excess of 1000.
I encourage all readers to give me your thoughts on the turnaround of the U.S. rig count and the date it happens. Give it your best shot.