U.S. oil rigs continued to get hammered this week despite still-rising levels of production.
Drillers idled 98 rigs, dropping the number to 1,358 and marking the 10th consecutive decline, Baker Hughes reported on Friday. The total U.S. rig count is down 30 percent since October, an unprecedented retreat.
The collapse in oil prices has wiped out more than 100,000 oil jobs worldwide. That hasn’t shown up yet in U.S. jobs numbers, and American oil production is at its highest seasonal levels in decades. Still, there’s mounting anecdotal evidence of an industry in distress, and the rig counts appear to be in free fall.
Rig counts are a controversial signal for U.S. oil watchers. Some see it as a leading indicator of production. Rigs are used to explore for new deposits and to drill new wells, so when rig counts decline, that will inevitably affect production down the line.
On the other hand, rigs have become more efficient, U.S. shale wells have been more prolific, and the rigs being idled are often the least productive. It’s possible that despite the plunging number of active rigs, U.S. production will continue to be slow to respond.