US oil drillers continue to shut down rigs at a breakneck pace

The number of oil rigs in use keeps cratering.

The latest data on US oil rigs from Baker Hughes showed that the number of rigs in use last week declined by 83 to 1,140.

This is down from a peak of 1,609 hit in October 2014. This is the lowest oil rig total since December 2011. The number of oil rigs in use is down by 276 from the same week last year.

Combining oil and gas rigs, the number of rigs in use was down 87 to 1,456.

In afternoon trade on Friday following the release of this data, the price of West Texas Intermediate crude oil spiked from around $US52 a barrel to near $US52.75. This is a 4% jump for oil, which has been extremely volatile over the last week plus.

As the price of oil has cratered, so have the number of oil rigs in use. But in its most recent earnings announcement, Baker Hughes — which also said it would cut 7,000 jobs — said that in past downturns in oil prices, the number of rigs in use have fallen by 40%-60%.

The current drop is about 30% from peak to trough.

Here’s the latest chart of the drop in rig count.

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