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Rig Counts and Crude Continue to Slide

by Elizabeth Alford on January 15, 2016

The U.S. rotary rig count shows that things are continuing in the oil and gas industry.

Related: U.S. Rig Counts at 698 for Year’s End

Baker Hughes reports that there 650 oil and gas rigs were running across the United States by midday Friday, a decline of 14 over the previous week. 135 were targeting natural gas (down 13 ) and 515 were targeting oil in the U.S. (down one).

The number of U.S. oil-drilling rigs is a marker by many of the health and the oil industry as operators sideline their rigs in order to wait out low crude prices. But they have been waiting a long time and the rig count has declined 61% over the past year.

Other tough news included another dip in oil prices this week, ending at below $30 a barrel on Friday. The global glut is surely to blame as the Chinese markets and the soon-coming increase of Iranian exports adds to concerns that the global glut will linger.

During the week of January 8th, the rig count plunged 37, the biggest drop since March 2015. This news caused Forbes to suggest that U.S. shale had finally capitulated.  suggests that drillers are out of cash. Until now, companies have been rationing dwindling funds from secondary share and bond offerings as well as equity capital.

One Forbes analyst said the drop “suggests that drillers are out of cash. Until now, companies have been rationing dwindling funds from secondary share and bond offerings as well as equity capital. If companies must finally pay for new wells out of cash flow, we might expect drilling to plummet in 2016 because tight oil companies have been spending other people’s money to pay for half their drilling as late as the third quarter of this year.”

The Baker Hughes Rig Count is an index of the total number of oil & gas drilling rigs running across a the United States. that is published every Friday. Read more at bakerhughes.com

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