US oil rig count down big again, shale not nearly as robust as most believe

North America Rig Count 2016-2-19

US Rig count is down big again this week, 8 or 2.3% of the total.  Over the last five weeks 8% of working rotary rigs have been idled.  Yet, many still seem to believe a turnaround in rig count is imminent.  I've seen some that thought rig count would surprise to the upside this week.  Others are saying rig count will move up starting in the $40s.  People we are already in the low to mid $40s and producers idled a huge percentage of rigs this week with the bulk coming from the Permian basin, one of the best most economical basins to drill in the US.

It seems that false premises are hard to break.  Late last year and into this year the oil bears kept saying US shale economics is great in the $40s and good in the $30s.  They'd pump like crazy to make up for lost revenue with more barrels.  Now we are in the $40s again and there is no indication US shale is ready to ramp up.

History doesn't repeat but it rhymes.   See my comparison of WTI to rig count.  US rig count increases over $60/bbl