Monday, February 1st, 2010
Oil Rig Counts Jump on Future Oil Prospects
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International oil companies like Petroleo Brasileiro SA (NYSE:PBR) and Exxon Mobil Corporation (NYSE:XOM) continue to drive demand for oil rigs from companies like Transocean Ltd. (NYSE:RIG) in a vote of confidence for a continued recovery in oil prices.
Oil drilling activity is on the rise with 35 additional rigs going online during the past week, according to data from Baker Hughes. While the count is still down about 155 from last year, the increase marks a vote of confidence in the recovery of oil prices over the coming years.
However, the jump in rig counts were primarily attributed to key basins, like the Haynesville and the Marcellus basins for natural gas and the Permian and Williston basins for crude oil. Many operators also appeared to be diversifying away from gas activity as oil prices rose higher.
In the short-term, however, crude oil and natural gas prices also continue to trend lower amid demand concerns, despite positive economic reports out of the United States. Many energy analysts insist that a strong recovery in oil prices is not likely to occur until the summer months.
Meanwhile, the Organization of Petroleum Exporting Countries (or OPEC) cut its crude oil production in January for the first time in five months, according to a Bloomberg News survey. The 11 countries with quotas, however, exceeded their allotted production limits.
In the end, the future of oil prices remains uncertain, but investors are favoring an increase in demand and rebound in prices when global economies begin to pick up speed once again. Meanwhile, the short-term could spell troubles until the summer months.
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-- Written by Rick Telfur
