With falling crude oil prices and an Obama Administration that is seen as opposed to more domestic drilling, domestic oil drilling in the United States has already begun to fall even more than expected. Ironically, it is beating down the share prices of drilling companies and sewing fears of potential supply disruptions when the economy begins to recover.
In a surprising weekly accounting, Baker Hughes' latest report showed that the number of drilling rigs in operation has fallen 12% in the September to early December period. Last week, crude oil rose for the second in three weeks, and volume-based indicators have now reversed to the upside. (I use these volume indicators as a leading indicator that typically reverses before prices do.) While OPEC's announcement last week that it will "severely" curtail crude production was blamed for last week's rise in prices, apparently the lower price is beginning to scrimp supplies domestically, also.
