Lower rig count should support oil prices

Posted: April 27, 2015 in Uncategorized

Financial Post

If you’re looking for signs of further strength in oil prices, one of the best places these days is the U.S. rig count.

Energy services firm Baker Hughes Inc. reported that oil drillers idled 31 rigs last week, exceeding the previous week’s decline of 26 and marking the third consecutive sharp pullback.

Some of the weakness may be the result of contracts rolling off, but Justin Bouchard at Desjardins Capital Markets said the reading supports the view that U.S. supply growth is nearing a critical inflection point.

The analyst noted that the decline of more than 50 per cent in drilling activity, coupled with deferred well completions, should slow production growth.

In its monthly Drilling Productivity Report released earlier in April, the U.S. Energy Information Administration suggested production in U.S. shale basis was set to modestly decline in May.

However, Bouchard stressed the importance of a rapidly growing inventory of uncompleted…

View original post 49 more words

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