Baker-Hughes Rig Count Up Again
For the second time in as many weeks, the Baker-Hughes Rig Count has reported an increase in North American drill rigs. Today’s figure came in at 676, up three from last Friday. It looks like North American drillers continue to be optimistic toward the global oil markets in 2020. At this point, one has to wonder why. March WTI crude oil futures are continuing their plunge, having tested the waters beneath $54.00.
The early-2020 trend in oil production is drill, drill, drill. Reports from earlier this week suggested that China was due to bring 80 wells with a 2 million barrel per day capacity online by 2025. While the timeline is vague, it looks like the U.S. isn’t the only country seeking energy independence. This will be a situation to watch as the U.S./China trade war wears on.
Baker-Hughes Rig Count Up, WTI Down
In a Live Market Update from yesterday, we talked about the bearish pressure facing March WTI crude oil futures. Little has changed in the last 24-hours as a brief bump north from $55.00 has given way to heavy selling.
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Overview: As you can see on the daily chart above, $55.00 acted as merely a pitstop on March WTI’s descent south. Momentum is definitely to the downside of this market and a short-side bias is warranted. In fact, buying WTI before we test the $52.50 level is extremely risky. Should we see growing supplies and another jump in the Baker-Hughes Rig Count next Friday, a test of $50.00 may be in the cards by January’s end.
Going into the weekend break, it may be best to take a wait-and-see approach to trading oil. However, if you are going to trade, taking a short-or-nothing approach is the best course of action.
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