By January 13, 2017 Read More →

Rig count down for the second week in 7 months

rig count

Analysts say the drop in the US rig count is only a brief pause in the expected recovery. Apache photo.

Canadian rig count up by 110 rigs

Jan 13 (Reuters) – The rig count in the U.S. fell this week for only the second week in the last seven months, likely just a brief pause in a recovery expected to last into 2018 as shale producers plan to boost spending as crude prices hold near an 18-month high.
Drillers cut seven oil rigs in the week to Jan. 13, bringing the total rig count down to 522, compared with 515 rigs seen a year ago, according to energy services firm Baker Hughes Inc on Friday.

That decline ended the longest weekly streak of adding rigs since August 2011. The current streak ended at 10. Drillers added rigs for 19 weeks in 2011.

In Canada, the number of rigs jumped significantly from 205 to 315.
Since crude prices first topped $50 a barrel in May after recovering from 13-year lows in February, drillers have added a total of 206 oil rigs in 29 of the past 33 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years starting in mid 2014.
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 trading around $53 a barrel on Friday and set for a weekly drop on lingering doubts over the extent of planned cuts by the Organization of the Petroleum Exporting Countries (OPEC) and concerns over the health of the Chinese economy.
Growing U.S production has also weighed on the market as U.S. crude output last week reached 8.95 million b/d last week, the most since April of last year, U.S. Energy Information Administration data showed.
“EIA data and our own government policies have to leave you thinking that a U.S. production response may unwind all the production cuts Saudi Arabia and others are planning,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle.
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 the balance of 2017 were trading around $55 a barrel, while calendar 2018 was fetching over $56.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the total oil and gas rig count would average 765 in 2017, 879 in 2018 and 990 in 2019.
Most wells produce both oil and gas.
That compares with an average of 509 in 2016 and 978 in 2015, according to Baker Hughes data.
Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 26 exploration and production (E&P) companies planned to increase spending by an average of 34 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 Marguerita Choy)
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