According to the Industrial Commission of North Dakota the number of drilling permits in July was 178 while it rose to 276 permissions in August, which is by far the highest number of drilling permits issued in a month so far this year. This suggests we should expect further large hikes in output going forward.

After having posted the largest Year-on-Year increase of crude oil output in May-2012 of 280 kbd, the growth had fallen every month since then to 157 kbd in June and most people had expected the growth to continue to drop for the coming months. Hence it is interesting to note that the year on year growth for July in North Dakota jumped back up to 198 kbd. Even if oil production in North Dakota should not increase any more from now to the end of the year, the year on year growth will average about 140 kbd for the remaining 5 months of the year.

The average rig count per month in North Dakota has fallen from 185 rigs in January to 182 rigs in July according to the Industrial Commission of North Dakota. According to Baker Hughes the number of horizontal rigs working in the Bakken was 157 in July and 159 in August. In July last year there were 209 horizontal rigs working in the Bakken, yet production was 199 kbd lower. This fact is quite telling for what is going on in this industry. Efficiency is improving quicker than many though possible and it is no longer possible to count the number of rigs to get a feel for how many wells will be drilled.

Eoin Treacy's view The revolution in unconventional oil and gas supply continues to be a game changer for the energy sector. However, due to the high prices paid for drilling rights and the ensuing collapse of natural gas prices, the stock market performance of many shale gas companies lagged the wider market as they adjusted to the new pricing environment. In many cases this necessitated migrating to shale oil properties, not least in the Bakken and Eagle Ford formations. That process has ended and shares are responding favourably once more.

While shale oil and gas have been making headlines this is by no means the only source of additional supply likely to affect the energy markets over the next decade. Offshore and particularly deep water drilling also represent important opportunities for the sector. A piece contrasting the performance of these two portions of the energy sector in Comment of the Day on January 18th 2013, which highlighted the outperformance of the offshore drilling sector may be of interest.

Companies such as EOG Resources and Gulfport Energy have outperformed not least because they offer some of the best pure-play exposure to the USA's unconventional oil growth markets. While both shares continue to hold progressions of higher reaction lows they are becoming increasingly overextended relative to their respective 200-day MAs.

Following an initial strong rally, Range Resources has spent much of the year ranging with a mild upward bias. A sustained move below the 200-day MA, currently near $75, would be required to question medium-term scope for additional upside. Noble Energy continues to hold a progression of higher reaction lows while Apache Energy has base formation characteristics and a sustained move back below the 200-day MA would be required to question recovery potential.

In the drilling equipment sector, Dresser Rand has been ranging with an upward bias since January and a sustained move below $60 would be required to question medium-term scope for continued upside. Drip-Quip focuses on the offshore sector and is now accelerating higher. The first clear downward dynamic, sustained for more than a day or two, is likely to signal a peak of at least near-term significance.

In the drilling sector, Seadrill has paused below $300 but a sustained move below the $250 area would be required to question medium-term upside potential. Rowan Corp has developed a rounding characteristic over the last couple of years which is generally consistent with accumulation. Precision Drilling which is predominately focused on Canada has held a progression of higher reaction lows since July 2012 and has been consolidating above the psychological $10 area for the last two months.

In the oil service sector, Core Laboratories broke out to new all-time highs last week and a break in the progression of higher reaction lows would be required to question medium-term upside potential. Oceaneering also continues to trend consistently higher. Both Halliburton and Schlumberger continue to extend breakouts from 18- month ranges while Baker Hughes is testing the upper side of its base. Carbo Ceramics focuses on fracking. The share is in the process of completing a yearlong base as its breaks above the psychological $100. Oil States International focuses on the offshore sector and appears to be in the process of completing a first step above its more than two-year range.

(Also see David's comments on Gulf of Mexico supply gains in Comment of the Day last Friday)