On a day when data shows that this year, for the first time in history, oil consumption is outpacing production, a report released today by Baker Hughes Incorporated (NYSE:BHI) indicates that oil companies are still investing heavily in Rig Construction (NYSE:OIH) and development. The data comes from the firm’s weekly North American Rotary Rig Count, a census of the number of drilling rigs actively exploring for or developing oil or natural gas in the United States and Canada. To be counted as active a rig must be on location and be drilling or ‘turning to the right’.
Numbers from this weeks’ release showed a count of 1 new active Rigs up and running this week, placing the total number of domestic oil rigs at 1,851. The number of active Rotary Rigs has increased by 313 over the past year. This plethora of supply-side growth may come as something of a surprise as domestic oil prices have surged in recent months.
Answers to this dilemma may be found in the census numbers for International Rigs, which have experienced more modest growth over the same time period. There was a reported gain of 22 active International Rigs over the past week, placing the total number of active intl. rigs at 1,151. However, this total still represents the addition of 61 new rigs over the past year.
Whether or not we can extrapolate macroeconomic projections regarding the future of oil prices from this data is unclear, though the significant growth in rigging activity in the past year suggests that oil suppliers are a long way from having exhausted production capacities.
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