When oil prices will bottom

Dueling analysts declare that oil prices have touched bottom – or that they will keep sliding on down past $40, possibly settling at $20, where Saudi Arabia would leave them indefinitely. The truth of the matter probably lies in the US rig count -the number of drilling rigs at work making new oil and gas wells and reworking old ones.

In 2008, as the shale fracking frenzy was reaching its stride, just over 2,600 U.S. drilling rigs were busy.  Today, the number has fallen below 1,400. The rig count is likely to fall below 1,200; the “big three” U.S. oilfield service firms of Halliburton, Schlumberger, and Baker Hughes already have begun laying off what is likely to reach at least 22,000 workers. As the rig count begins to stabilize, oil prices probably will also: a stable rig count means that demand and supply are approaching each other and that producers are needing to keep a steady drilling pace to meet their sales contracts.