National oil companies (NOC) are driving robust demand for oilfield services, according to a new report by Calyon Securities analyst Mark Urness. NOCs are luring service companies to invest in international infrastructures to meet their growing demand. Visibility of demand for oil services and equipment in such countries as Brazil, Saudi Arabia, China, India and Mexico stretches beyond the end of the decade,” Urness says. Also, the recent recovery in North American drilling activity has provided additional momentum to the already growing demand worldwide. With crude oil prices currently above $129 per barrel and the natural gas strip above $11 per thousand cubic feet, North American drilling activity is expected to increase further in 2008 and 2009. We recently raised our 2008 and long term price forecasts for crude oil and natural gas, citing global supply constraints. We are also raising our worldwide rig count forecast to 3,279 units from 3,060, an increase of 7% year-on-year,” he says. Calyon reports that demand destruction and moderation in revenue and margin growth will start weighing on oilfield stocks eventually, but current visibility of growth should support oilfield stock valuations at current levels.