Rig Counts Follow a Cyclical Pattern

The number of operational rigs is a measure of activity of the oil service industry. The more rigs that are working the higher the revenues, earnings and stock prices of the oil service companies. The rig count data, compiled by Baker Hughes (BHI), a large oil service company, are roughly correlated with oil prices and natural gas prices. Therefore, As prices move up and down in broad cycles, the rig count fluctuates accordingly.

Rig Count and Oil Service Index (OSX)

This chart shows the general correlation of rig count cycles with the price cycles of the Oil Service Index (OSX). Both the OSX and rig counts are near all-time highs.

Current Oil Price

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Posted January 26, 2008.