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Oil Prices Continue To Plunge As U.S. Rig Count Increases

For the oil markets, this week has been nothing short of a Tea Cup ride at some rinky-dink traveling fair, operated by some suspect toothless man wearing overalls with a pocketful of Wild Turkey. And what better way to round out the oil industry’s week by yet another industry report that has the power to send markets spinning for one more round.

And so it has. Baker Hughes today reported a 12-site increase in the oil and gas rig count, bringing the total number of active rigs to 569. Oil accounted for most of the gains, with a 9-site increase, with the number of gas rigs increasing by 3.

Texas was the biggest winner this week, with a 6-site increase. For Texas, this brings the total oil and gas rig count to 262, which is 78 under this same time last year. The next largest gainer by state is Oklahoma, which had a 3-site increase. Oklahoma is now only 7 sites shy of what it had in operation this same time last year.

Alaska was the only state to lose a rig this week.

Last Friday, markets were a slightly relieved to hear that Baker Hughes had reported a small, two-rig decline. Small numbers, but a welcomed relief that ended what had been 17 weeks of steady or increasing numbers to the active oil rig count. Before the count released last Friday, prices had been on the decline, reaching losses that had not been seen for over a month. Right before the count, WTI was trading at $49.21 and Brent at $50.02.

This week, moments before the release by Baker Hughes, WTI was trading at $43.99—down 1.5% since open, with Brent trading at $45.50—down 1.83% from its opening mark. So going into the count, we were already almost $5 per barrel under last week figures. With the reported increase in the number of active wells in the United States, the market is sure to see even bigger losses heading into the weekend.

By Julianne Geiger for Oilprice.com

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