The number of active oil rigs in the US is the highest since October 2015 after Baker Hughes reported the addition of five oil rigs last week, up from 597 the prior week to 602. The total number of active oil and gas rigs is currently 754. That’s 252 rigs more than this time last year. Since OPEC’s production cut agreement on November 30, the US active oil rig count has risen by 125. This puts into focus the interplay between US additions and OPEC subtractions in the global oil market, which will largely determine the trajectory of oil prices this year.
Earlier last week, the EIA reported US oil inventories rose by 564,000 barrels, marking the seventh consecutive week that amount of oil in storage has increased. US oil production was 9 M/bpd for the week, the highest level since April 2016.
At present, two pressing unanswered questions have observers on edge: 1) Will rising US production discourage OPEC from complying with its production cut? 2) Will a battle for oil market share reignite if OPEC production continues to fall as US supply rises?