On June 14, Baker Hughes reported that US energy companies had contracted the number of drilling rigs to the lowest level since February 2018. Oil production is ebbing away as US drilling companies are implementing plans on scaling back expenses because oil prices had dropped to a four-month low.
The oil rig count declined to 789 in the week ending June 7, much lower than 862 drilling rigs a year ago. The oil rig count is viewed as a barometer of an oil production volume in the short term. Meanwhile, oil production rates in the US have been going down in the recent six months. The reason is that independent companies involved in oilfield exploration and crude production are reducing expenses on drilling new oil wells. So, energy companies are more interested in boosting profits, rather than expanding oil production.
Following the report, US West Texas Intermediate futures sank below the level of $51 a barrel, the lowest price since January. Investors voice concerns that a slowdown in the global economy and escalating trade tensions between the US and China could undermine demand for crude oil worldwide.
