U.S. drillers added oil rigs for a sixth consecutive week, extending a nine-month recovery as shale producers ramp up spending to take advantage of a recovery in oil prices.
Drillers added five oil rigs in the week to Feb. 24, bringing the total count up to 602, the most rigs since October 2015, energy services firm Baker Hughes Inc said on Friday. RIG-OL-USA-BHI
During the same week a year ago, there were 400 active oil rigs.
Since crude prices first topped $50 a barrel in May after recovering from 13-year lows last February, drillers have added a total of 286 oil rigs in 35 of the past 39 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years starting in mid 2014.
The oil rig count plunged from a record 1,609 in October 2014 to a six-year low of 316 in May as U.S. crude collapsed from over $107 a barrel in June 2014 to near $26 in February 2016.
On Friday, U.S. crude futures were up about 1 percent on the week but lower on the day at around $54 a barrel on Friday, amid the market’s concerns over whether a surge in U.S. production will dampen efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers to drain a global oil glut.
Production increases in the United States, predominantly from onshore shale plays, could potentially limit further increases in oil prices during 2017/18.
Futures for the balance of 2017 were trading around $54.75 a barrel, while calendar 2018 was fetching less than $54.40.
U.S. producers have signaled higher capital spending and further production growth, perhaps beyond what many analysts expect, Citi Research said in an investor note this week.
“The global crude stock draws expected would be partially offset by the outperformance of U.S. production, which might upset calculations of core OPEC countries in lifting prices,” Citi said.
Oil and gas producer Apache Corp said on Thursday it would spend $3.1 billion in 2017, 63.2 percent more than it did last year, joining Exxon Mobil Corp, Chevron Corp and Hess Corp in boosting their capital budgets.
The surge in drilling activity can be seen in the oilfield service industry.
Investment bank Raymond James, which predicts the rig count could approach 1,000 by the end of 2018, estimated frac sand demand would hit record levels this year at roughly 55 million tons and exceed 80 million tons by next year, 60 percent above 2014 levels, due in large part to producers requiring more sand per well.
Source: Reuters (Reporting By Jarrett Renshaw; Editing by Marguerita Choy)