By Jocelynn Smith, Sr. Managing Editor Sovereign Investor.
Oil production levels have fallen off a cliff in the U.S.
In the latest reported results, total U.S. oil rig count dropped by four last week to 631. Over the past year, total oil rig count has plunged by 914 rigs. That’s a 59% decline in active rigs.
In the extremely productive Williston Basin in North Dakota, active rigs have dropped to 75 — hitting their lowest level since 2009 — compared to a year ago when there were 190 active rigs.
While new drilling techniques have led some companies to trim the number of rigs they have running, many have slashed their rig numbers simply because it has become too costly of an endeavor when the price of crude is still hovering below $60 per barrel. They’re trying to save their money now in the lean months, but it’s going to cost Americans substantially when the price of oil snaps back.
Oil companies have slacked in their exploration and production, but demand is not dropping off. In the U.S., oil demand is up 8% on a year-over-year basis at 20 million barrels per day for the week of June 12. In fact, in the first 24 weeks of 2015, oil demand is up 4.4% compared to the same period a year ago.
And remember, this is demand from a country that still isn’t firing on all cylinders as it struggles to come back from the Great Recession. We are seeing signs of economic strength coming from Europe and across Asia. With growth comes the rising demand for the fuel to keep it all running smoothly.
Very soon a loud crack is going to be heard across the oil fields as supply finally breaks under the weight of mounting demand … and the resulting rise in the price of black gold is going to be sharp.