Area chart showing the number of oil rigs in the United States from January 2012 to February 2024. The number of oil rigs peaked at 1,510 rigs in 2012, and have declined 63%, as of September 2023. In September 2023, only 557 oil rigs remain in the United States. Lower rig counts make it more difficult for U.S. producers to quickly respond to higher oil prices, limiting supply growth, and strengthening the bull super-cycle.
Sources: Energy Information Administration, and Wells Fargo Investment Institute. Monthly data from January 1, 2012, to February 29, 2024. Chart shows rig counts from the following regions: Permian, Niobrara, Haynesville, Eagle Ford, Bakken, Appalachia, and Anadarko. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility. Investing in commodities is not appropriate for all investors.
Super-cycle = If you look at commodity prices over the very long term (hundreds of years), it becomes evident that they tend to move in overall bull and bear cycles, some lasting decades. These are super-cycles.
Key Takeaways
- As an overall trend, U.S. oil producers are focused on returning profits to shareholders instead of increasing capital expenditures and expanding drilling operations. This attitude is reflected in the 64% drawdown in oil rigs, since peaking at 1,510 oil rigs in 2014.
- Declining rig counts make it more difficult for producers to quickly respond to higher crude oil prices. This delayed supply response puts a lid on supply growth and strengthens the commodity bull super-cycle.