As we noted at the end of April, rig counts in the US have not yet ticked up despite a steady rally in crude oil prices. As we outlined in that earlier post, we consider it unlikely that US production will rise materially without a rise in drilling. The primary measure of drilling activity, Baker-Hughes’ weekly report on the number of rigs active in the United States, came out earlier this afternoon. That figure was flat at 318 this week, the first without a decline in 8 weeks. Could this be the bottom? We have no way to know, but production data has continued to decline as we would expect given the rig count activity data; it fell to a new local low of 8.79mm barrels per day in data reported by the EIA Wednesday morning. That suggests more reliable monthly estimates of output will also continue to decline in coming months.