US rig counts are yet to stabilise at lower levels

Rig counts in shale oil areas other than the Permian are no longer high enough to compensate for the declines of existing output. The tendency to leave wells uncompleted is amplifying that process and is resulting in a faster immediate fall (although that inventory of unfracked wells will help speed up the ultimate recovery). 

Baker-Hughes data showed a decline of 11 rigs in the four main shale oil regions in the latest week, bringing the count to 577 rigs. The largest fall was in the Bakken,where a fall of 6 brought the total to 91 rigs, 99 lower than in November 2014. 

The cumulative fall in shale oil drilling since November's OPEC meeting is now 548 rigs. Total US oil drilling fell 11 to 802 rigs. 

"We expect drilling activity to decline for a while to come, particularly as we expect financial and credit conditions within US shale oil to start to come to the fore in Q2 as drivers of activity. We also expect these conditions to somewhat slow the response of the US oil shale industry to the expected rebound in prices during the rest of 2015", Said Standard Chartered in a report on Wednesday