The weekly Baker Hughes rig count shows some small changes this week. The oil rig count went up by one, making it 412. Meanwhile, the gas rig count dropped by one to 122. Overall, the total rig count remains steady at 539. In the oil market, crude oil prices have slightly fallen. Prices are down by $0.72, or 1.13%, now at $63.24. Last week, prices didn’t change much, closing at $63.33.

Current Market Signals

The unchanged rig count, with only one new oil rig added, suggests that U.S. producers aren’t eager to expand operations while crude oil is near $63 per barrel. This lack of action indicates that the market is waiting for clearer price signals before starting new drilling. This hesitation leads to a period of steady prices for now. This caution is understandable given recent economic data. Manufacturing PMI data from July 2025 revealed ongoing slowdowns in both China and Europe, which is affecting fuel demand. Additionally, the latest EIA report showed a smaller-than-expected draw of only 1.2 million barrels from crude inventories last week, indicating that consumption isn’t strong enough to significantly raise prices. On the supply side, there appears to be a price floor around the low $60s. OPEC+ has agreed in their June 2025 meeting to maintain production cuts through the end of the year to avoid a major price drop. The current low U.S. rig count, which is nearly 20% below the highs seen in mid-2023, suggests that U.S. output might remain flat or decline in the coming months, tightening future supply even further.

Potential Trading Strategies

For the next few weeks, this likely points to a market that will stay within a range, caught between weak demand and limited supply. Traders might want to try strategies that benefit from low volatility, such as selling iron condors with strike prices around $60 and $68 on near-term options contracts. This strategy bets that crude oil prices won’t shift significantly in either direction. However, this balance probably won’t last long. We could consider buying longer-term straddles, which would allow us to profit from a large price change in either direction before the year ends. The current low implied volatility also makes these positions cheaper to enter, setting up for a potential breakout when demand improves or supply cuts start to have a bigger impact. Create your live VT Markets account and start trading now.

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