The rise in oil prices from their lows in early 2016 to near $50 now should have caused a boom in drilling activity. But that's not what's happened.
"While rig counts dropped from 1,499 to 536 in 2015, they did not recover alongside the price of oil in 2016," said Ihor Dusaniwsky of Wall Street analytics firm, S3 Partners, "dropping even further to 525 until finally rebounding slightly and hitting 609 in March."
Last week, incidentally, Baker Hughes' US oil rig count rose for the eighth straight week, up seven to the aforementioned 609.
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That pushed US oil inventories rose up by 8.21 million barrels to 528.4 million barrels, according to the Department of Energy, the highest since the agency began record keeping in 1982.
The reason lies with shale producers who have ramped up their production recently.
"Fewer offshore wells have come online as the increased production in shale drilling took up most of the slack that came from OPEC's and Russia's drop in production since Q3 of 2016," Dusaniwsky noted.
In fact, it looks like the threat from shale won't go away anytime soon as they have adapted to the low-price environment by turning leaner and more efficient.
"Breakeven prices in the $70 per barrel range are a thing of the past," Dusaniwsky said. "Most shale regions like the Permian Basin and Eagle Ford remaining profitable at $36/barrel."
Transocean, an offshore oil drilling company, is one victim of the shale comeback.
"In 2015, Transocean's stock price rose and fell along with the price of crude," he added. But, in 2016, when shale oil drilling started to pick up pace, "RIG's stock price failed to recover as crude prices rose 91% to a midyear high of $51.09, while RIG's stock price increased only 18.6% over that same time period."
