Last week the Baker Hughes rig count dropped to 88 operating rigs, down from a high of 1,609 in 2014. The rig count is a sign of production activity in the oil industry and shows the effects of the oversupply of Crude still in existence. The continued drop in operating oil rigs will lead to an escalation in crude prices when the current oil surplus resides.

There is also an interesting Wall Street Journal article discussing the hedging practices of big oil producers. “In an about-face, companies are using hedges to lock in prices that they turned their noses up at a few months ago. Last September, Energen Corp. officials told investors they would hold out for roughly $60 a barrel before using the futures market to hedge their production. But the company recently said it had locked in about half of its expected 2016 production—or more than 6 million barrels—at around $45. EV Energy Partners LP hedged in recent weeks at prices slightly above $40, even though last spring it opted not to hedge when prices were between $50 and $60, finance chief Nicholas Bobrowski said.” This shows that produces are expecting the market to remain below the $40-45/bbl crude level.

As of Monday morning, Crude was trading flat at $43.71/bbl, RBOB Gasoline at $1.5338/gal and Heating Oil at $1.3171/gal.