Rig Count Is No Bellwether

Posted on | Posted in Blog

Rig count is no longer the bellwether predictor it used to be.

Seems these days the quick one-line assessment of anything complicated has infected analysis of the oil and gas industry. That comes to us in the form of the weekly rig count.

One and two rig differences from week to week are immediately heralded as the leading indicator that oil prices will be on the way back up – any day now.


In the days of rapid expansion through fracking and rising prices, rig count might have been a decent leading indicator; but it’s nearly meaningless now.

The equilibrium that moves prices today is not on the production side. It’s on the consumption side – and year over year demand growth for oil and gas ain’t happening.

Meanwhile inventories consistently remain at all-time highs. While there are some regional supply interruptions countries like Iran and Iraq are increasing production. And the big valve in Saudi Arabia continues to turn counter clockwise. We’re awash in product and there’s no supply shortfall on the horizon.

The majors face enormous debt service – $184BB among Exxon, Shell, BP and Chevron alone. Cutting back existing production makes no sense. And, drilling appreciably more to expand will only add to the excess supply availability. Drilling more makes no sense. And reasonably so, few are doing it.

Instead it seems like the inventory numbers are the better barometer to watch. Put the bell on the tank gauges. When the levels go down, the prices will creep back up. Maybe after a long while, looking at rig count will again make sense.

Leave a Reply

Your email address will not be published. Required fields are marked *

Latest Posts
04 Jan 2018

Automation and Control Systems Expert Refers Globalogix

Dan Turner, an expert in automation and control systems for 30+ years, sat down with Globalogix President, Chuck Drobny, to talk about the benefits of working with Globalogix: “[Globalogix is] a company that would sit down, you knew the technology, you were competent, you completed the project efficiently and the customers were happy when we[…..]

Latest Posts
12 Dec 2017

BLOCKCHAIN: Taking Business by Storm

In our webinar on Blockchain and its impact on business, oil & gas and SCADA, you’ll be given insight into the topic from our CEO, Chuck Drobny. He recently presented on Blockchain at the SCADA Technology Summit in Denver, and is sharing His presentation on Blockchain and how it’s changing the future of business. This[…..]

Latest Posts
29 Nov 2017

Meet Charles Drobny of GlobaLogix in Northwest Corridor

Today we’d like to introduce you to Charles Drobny. Charles, please share your story with us. How did you get to where you are today? GlobaLogix began with six oil and gas veterans in 2004 to provide instrumentation and control systems to midstream operators. The company gained its first project in 2005 to design and[…..]

Latest Posts
10 Nov 2017

Controlling Automation Installation Costs

The current wave of new oil and gas field development has set into motion two unique sets of challenges due to remote geography and an increasing lack of qualified manpower. New well site, well pad and gathering system oil and gas automation projects are plagued with delays and cost overruns that can’t be mitigated with[…..]

Latest Posts
25 Sep 2017

Take a Flood Insurance Lesson from HAZMON

Houston is amazingly flat, with high ground existing mostly on freeway interchanges. On top of that, add three bayous and at least two rivers that drain state-sized basins through the city and surrounding residential communities.  When it rains in Southeast Texas the water flows toward Galveston Bay, and a few times each year at least[…..]