US rig count up for 8th week in a row: Baker Hughes

The rig count increased by 13 in the week ending December 23. In the United States 523 rigs were operational, down below the 538 this time last year. Encana photo.

Rig count up, extending seven-month long drilling recovery

Dec 23 (Reuters) – U.S. energy companies increased the rig count for an eighth week in a row, extending a seven-month drilling recovery as crude prices remained near a 17-month high.

Drillers added 13 oil rigs in the week to Dec. 23, bringing the total count up to 523, the most since December 2015, but still below the 538 rigs seen a year ago, energy services firm Baker Hughes Inc said on Friday.

In Canada, the rig count dropped by 10, ending at 224 for this week.

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Since crude prices recovered from 13-year lows in February to around $50 a barrel in May, drillers have added a total of 207 oil rigs in 27 of the past 30 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years.

The Baker Hughes 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.

U.S. crude futures were holding around $53 a barrel on Friday ahead of the Christmas and New Year holidays as the market waited to see how the Organization of the Petroleum Exporting Countries manages its planned output cuts starting on Jan. 1.

That put the front-month on track for its fifth week of gains in the last six, with the contract up about 22 per cent since mid-November.

Analysts said they expect U.S. 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 both calendar 2017 and 2018 were trading around $55 a barrel.

Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, recently forecast the total oil and natural gas rig count would average 508 in 2016, 723 in 2017 and 933 in 2018.

Most wells produce both oil and gas. Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 23 exploration and production (E&P) companies planned to increase spending by an average of 35 per cent in 2017 over 2016.

That spending increase in 2017 followed an estimated 47 per cent decline in 2016 and a 35 per cent decline in 2015, Cowen said, according to the 65 E&P companies it tracks.

(Reporting by Scott DiSavino; Editing by Meredith Mazzilli)