US Oil Rigs Are Shutting Down Like Crazy

The number of US oil rigs in operation keeps tumbling.

The latest Baker Hughes rig count data showed that the total number of US rigs in operation — which includes both oil and gas rigs — fell by 35 last week, to 1,840 from 1,875. This report is usually released on Friday afternoons, but was released on Monday due to last week's Christmas holiday.

This is down from 1,920 for the week ended December 5. Oil rigs in use fell by 37 last week, while gas rigs actually rose by 2.

For the week ending December 12, the number of oil rigs in use fell by 27, which at that time was the single biggest weekly decline in two years. The following week, the number of rigs in use fell by 18.

The drop in oil rigs on Monday also comes alongside two discouraging pieces of news for the oil industry. The price of West Texas Intermediate oil is crashing again, touching $53 a barrel for the first time since May 2009 and declining more than 3% on the day.

Additionally, manufacturing data from the Dallas Fed showed that business leaders in Texas are growing concerned about the drop in the price of oil. As one Texas business executive said, the drop in crude oil prices was, "going to make things ugly ... quickly."

And according to Monday's report, Texas saw 16 rigs shut down last week.

In Canada, the number of rigs in use also continues to crater, which rigs in use falling by a staggering 135 last week to 256, which is below the same point a year ago. Canada's production, however, is more seasonal than the US.

Here is the chart for US rig use, which now shows a noticeable drawdown over the last month, even on a 14-year time scale.