Over the past several months, oil traders have become increasingly focused upon the U.S. rig count as a leading indicator of future U.S. oil supply growth. Fueling the bearish oil fervor over the first six months of this year, the U.S. rig count grew (on average) by an astounding ~50 rigs per month and rose 21 of the first 22 weeks of the year. Surprisingly to most traders, this growth persisted in the face of a steady bleed off in oil prices. Given the oil market’s current hyper-focus on the U.S. rig count, we now believe one of the key catalysts to drive oil prices higher will be evidence that U.S. operators are reducing drilling in response to depressed oil prices. In this week’s “Stat” we will focus upon our recently revised outlook for the U.S. rig count. Specifically, we now think the U.S. will likely see a modest 100 rig decline in activity in the back half of 2017 before moving sharply higher in 2018. Of course the expected 2018 surge is spurred by our outlook for meaningfully higher oil prices next year. It is important to note that our expectation for the average annual 2017 and 2018 rig counts have not changed, but we have changed the profile of the expected U.S. rig count going forward. The graph below shows the adjustment that we have made to our U.S. drilling activity forecast.