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US energy companies this week added oil rigs for a 12th week in the last 13, extending an eight-month recovery as drillers take advantage of a deal by Opec to cut production that has kept crude prices over $50 a barrel since early December.
US energy companies this week added oil rigs for a 12th week in the last 13, extending an eight-month recovery as drillers take advantage of a deal by Opec to cut production that has kept crude prices over $50 a barrel since early December.
Drillers added 15 oil rigs in the week to 27 January, bringing the total oil rig count to 566, the most since November 2015, energy services firm Baker Hughes said on Friday. During the same week a year ago, there were 498 active oil rigs.
Meanwhile, the number of rigs chasing gas rose by three to total 145.
Since crude prices first topped $50 a barrel in May after recovering from 13-year lows in February, drillers have added a total of 250 oil rigs in 31 of the past 35 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years starting in mid-2014.
Almost two-thirds of the rigs added since May were in the Permian basin, the nation's biggest shale oil play located in west Texas and eastern New Mexico. Drillers this week added 10 rigs there, bringing the total up to 291, the highest since March 2015.
The gains were seen in the Permian states. New Mexico added four rigs for a total of 42, while Texas gained nine to total 351.
Elsewhere in Texas, the Eagle Ford shale added five rigs this week.
The Haynesville of eastern Texas and Louisiana added two rigs this week. Louisiana itself added two rigs for 53.
The Granite Wash, which straddles the Texas-Oklahoma border, gained one.
Also in Oklahoma, the Arkoma Woodford picked up one rig and the Cana Woodford added three.
The Williston basin of North Dakota and Montana added two rigs. North Dakota picked up a single unit overall for a total of 36.
Colorado saw the biggest losses this week, shedding three rigs for 25. The drop was reflected in the DJ-Niobrara, which lost three.
Arkansas dropped a single rig, leaving no active units in the state. The loss was seen in the Fayetteville shale, which lost its last working rig.
West Virginia also dropped a rig for a total of eight. Its loss was mirrored in the Marcellus, which also lost a single rig.
The Baker Hughes oil rig count plunged from a record 1609 in October 2014 to a six-year low of 316 in May. US crude collapsed from over $107 a barrel in June 2014 to near $26 in February 2016.
US crude futures were trading around $53 a barrel on Friday and set for a sixth increase in the past seven sessions on signs Opec and non-Opec producers were mostly adhering to planned output cuts announced in November and December.
Analysts said they expect US energy firms to boost spending on drilling and pump more oil and natural gas from shale fields in coming years now that energy prices are projected to keep climbing.
Futures for the balance of 2017 were trading around $54 a barrel, while calendar 2018 was fetching almost $55.
Analysts at Simmons, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the total oil and gas rig count would average 783 in 2017, 898 in 2018 and 1009 in 2019. That compares with an average of 683 so far in 2017, 509 in 2016 and 978 in 2015, according to Baker Hughes data.
Analysts at US financial services firm Cowen said in a note this week that its capital expenditure tracking showed 30 exploration and production (E&P) companies planned to increase spending by an average of 35% in 2017 over 2016. That spending increase in 2017 followed an estimated 48% decline in 2016 and a 34% decline in 2015, Cowen said, according to the 65 E&P companies it tracks.
US production was expected to rise from 8.9 million barrels a day in December 2016 to around 9 million bpd in April, 9.1 million in October and 9.2 million in November, the US Energy Information Administration said.