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Your email address will not be published.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
22 Feb 2019

3rd Party Hosted SCADA – We Have a Better Solution

With no SCADA Hosting Dependency, HMI is now located and hosted in the cabinet where there is still HMI experience and operation with no need for third parties to provide service once installed.

Latest Posts
11 Jul 2018

Another Workforce Challenge

As a company we follow the law of the land and our policies carefully abide the rules set by our customers. We work hard to insure safety in the workplace. We test to guard against the influence of substances that impede performance and jeopardize safety – whether alcohol, over the counter depressants, prescribed medications or[…..]

Latest Posts
15 Jun 2018

Not Enough People.

Our nation faces a monumental demographic problem – not enough people. Our birthrate, long below growth rate, is approaching non sustainability. Europe is already in the tank. The US is not far behind. Estimates proclaim nearly 20 million undocumented residents – who we’ve steadily marginalized as being illegals. The pathways to citizenship are ridiculously long, cumbersome[…..]

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[…..]