Oil prices and rig counts decline 4% following OPEC meeting

The total rig count for the United States in the week ended December 11, 2015, was down 4% from the previous week, the largest drop by percentage since the week ended April 10, 2015. The total rig count fell by 28 in absolute terms, finishing the week at 709, according to Baker Hughes Industries (ticker: BHI).

The overall decline continued to be led by rigs drilling for oil, which fell by 21, and stand currently at 524. The number of rigs drilling for oil at the end of this week represents a 66% decline in the number of rigs drilling, year-over-year.

Rigs drilling for gas also saw losses this week, shedding seven and ending the week at 185. While not as substantial as the year-over-year losses seen on the oil side, the number of rigs actively seeking gas is down 47% from the same time last year.

Oil prices followed a similar path this week, falling 11% since last Friday. U.S. crude oil benchmark WTI traded at $35.52 today, down from $39.97 last Friday.

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OPEC opens the taps

The continued decline in the U.S. rig count, along with the sharp drop in crude oil prices this week, both followed news from Vienna over the weekend that OPEC will remove its production limit. The move comes even as some of OPEC’s members were looking to reduce overall crude output to restore a price-floor.

“Effectively, it’s ceilingless,” said Iranian Oil Minister Bijan Zanganeh. “Everyone does whatever they want.” Ahead of the meeting, Zanganeh said Iran would not accept any production curbs until it restores about 1 MMBOPD of output after the removal of sanctions over the country’s nuclear program.

Prices were pushed down further by news yesterday that the group’s production continued to increase in November. OPEC produced an average of 31.695 MMBOPD last month, led largely by increased production in Iraq.

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