2017.05.2902:16:00UTC+00Oil in Global Economy Series: Numbers of Active Oil Rigs in U.s. rise for 19th Consecutive Week

The U.S. oil producers have added rigs in their operations for a 19th consecutive week, raising concerns that U.S. shale oil producers which were able to cut their production cost dramatically over the past years are now a low-cost global competitor and would continue to undermine the OPEC agreement to cut supplies. Last week, OPEC producers and 11 participating non-OPEC countries including Russia formally ratified the agreement first drafted last November to cut supplies by 1.76 million barrels per day. The new agreement extends the production deal for nine months until March 2018.

Despite the agreement on Thursday, oil price suffered a major selloff on that day and was down around 3 percent by the end of the day. It recovered somewhat on Friday but was still down for the week. WTI is currently trading at $49.7 per barrel and Brent at $2.3 per barrel premium to WTI. The increased production and an increase in the numbers of operating rigs remain a concern for the oil bulls. While the last week�s increase of just 2 rigs was the weakest among all 19 weeks of increase, the total numbers of operating rigs (722) have touched the highest level since April 2015.

A separate report showed that US oil production has reached 9.32 million barrels per day for the week ending on 19th May, which is the highest level of production since August 2015. The production has increased by 892,000 barrels per day since bottoming around last July.