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Oil Rigs Turning the Corner?

By Kim Khan - Oil prices have been dealing with geopolitics for months, from the trade battle between China and the U.S. to unrest in the Middle East.

But the market is focusing more on fundamentals now.

The Baker Hughes oil rig count rose to 673 from 659 last week, according to the reports released today.

The total rig count rose to 796 from 781.

That was the first time the both rig counts have risen in four weeks.

While the rises are small, it’s still important given the huge builds in fuel products over the past two week, Barani Krishnan, senior commodities analyst for said.

“For perspective, we lost 208 rigs last week, and notwithstanding this week’s rise, have dropped another net four in 2020,” Krishan said. “But if the count keeps going up by about 10 or so every week or every other week after this, then it certainly will change the flows in production.”

“What we certainly don’t need in an oversupplied market is higher rig counts, which in the simplest sense, means higher production,” he added.

The total rig count has been declining since the end of 2018. Its high was in October 2014 when it notched above 1,600.

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