Although there’s been a lot of back and forth about the whether the U.S. “shale boom” has been overblown, this week shows that oil production in the U.S. continues to flourish, although not at the same speeds as the last few months. Last’s week’s oil and gas rig count, with a surprising decrease of one rig in the U.S. after 23 straight weeks of gains, led many wishful thinkers to believe that the shale bubble may have finally burst. Today’s rig count, however, makes it look as if last week was not an omen, but a fluke, with a full dozen new rigs in the U.S. alone.
In the first eight weeks of 2017, oil rigs increased by an average of 10 per week in the U.S, rising to an average of 11 rigs per week in the following two months. As a relief to many, the eight week period ending on June 16 showed an average weekly gain of just 7 oil rigs, suggesting that the shale boom, though it continues to grow, is at least slackening in pace. This week follows that trend, with an increase of just 7 oil rigs and 5 gas. Now the question is: Will U.S. oil companies continue to deploy rigs, even with oil prices stagnating around $45 per barrel, or have we peaked?
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Many investment giants are banking on the former. Last week Goldman Sachs downgraded their projected 3-month average of $55.00 per barrel of WTI crude to $47.50, and analysts warn that prices could bottom out at as low as $30 per barrel before producers start…