Offshore floating rig demand has been riding the wave of higher oil prices since the crash of 2008, rescuing the market from severe over-supply and soft day rates. This surge of oil company cash is expected to keep rig demand and day rates strong through 2012. Current demand expansion may even outrun supply in 2012 despite the growth in capacity of some 40 rigs which have already been added in 2010/11. In the medium term drilling demand will again be strengthened by both rising oil and gas prices, steadily absorbing new capacity. Downside risks include a new financial crisis that could destabilise corporate spending as well as oil markets and a resurgence of upstream costs that could undermine drilling budgets.