More of the same. Rigs and spreads continue to fall, high oil prices notwithstanding.
Rig counts
Total oil rig counts: -5 to 502
Horizontal oil rig counts: -4 to 447
The Permian horizontal oil rig count: -4, again
The Canadian horizontal oil rig count remains essentially unchanged over the last four months, this week down 23 from last year
The US horizontal oil rig count is falling at a pace of -4.0 / week on a 4 wma basis.
This number has been negative for 43 of the last 44 weeks
Frac spreads fell, -4 to 255
This is still too high for the current rig count, as DUCs continue to fall.
To hold DUCs steady, the spread count must fall by 20
It looks like the industry has settled on 16 weeks of DUC inventory, where it stood on Friday, as the new normal.
As a result, expect spreads to roll off pro rata with rigs from here on out -- beyond the 20-spread readjustment necessary to hold DUCs steady -- at a ratio of one spread for every two rigs.
The Brent Spread – the difference between WTI and Brent – is also signaling the end of the shale revolution
Historically, WTI sold at a premium to Brent
Since the shale revolution, WTI has typically sold at a discount to Brent, generally in the range of $4 / barrel in recent times.
This discount was necessary to place incremental US shale oil barrels in the market.
In the last two weeks, the Brent spread has collapsed to around $1.50 / barrel, suggesting a tightening US market, which could be explained by low or no growth in US shale oil production.
Once again, nothing cheery in the data