This Chart Shows Why the Number of Oil Rigs May Not Matter Anymore
Rig history repeats itself
A drill pusher uses a torch to cut the top off a 50-gallon metal drum on an oil drilling site.
Photographer: Ty WrightThis article is for subscribers only.
The number of oil rigs drilling new wells in the U.S. has collapsed at an unprecedented rate. The weekly number has gathered a huge following as investors try to figure out when the crash in oil prices has reached its bottom. Strangely, the number may be irrelevant.
Rig counts have long been used to help predict future oil and gas production. In the past week drillers idled 98 rigs, marking the 10th consecutive decline. The total U.S. rig count is down 30 percent since October, an unprecedented retreat. The theory goes that when oil rigs decline, fewer wells are drilled, less new oil is discovered, and oil production slows.