While the rig count rose last week to 428 it is significantly below the 605 rigs reported this time last year. QEP Resources photo.
Rig count up by three this past week
Oct 7 (Reuters) – The number of rigs drilling for oil in the United States rose this week, extending one of its best recoveries with no cuts in the rig count for 15 straight weeks. Analysts are expecting more additions after crude prices climbed back over $50 a barrel.
Drillers added three oil rigs in the week to Oct. 7, bringing the total count up to 428, the most since February, but still below the 605 rigs seen a year ago, according to energy services firm Baker Hughes Inc on Friday.
That 15-week streak of not cutting rigs was the third longest since 1987, following 19 weeks in 2011 and 17 weeks in ended in 2010.
In Canada, Baker Hughes reports the number of rigs was up last week by three, for a total of 165.
The oil rig count plunged from a record high of 1,609 in October 2014 to a six-year low of 316 in May after crude collapsed from over $107 a barrel in June 2014 to near $26 in Feb. 2016 in the biggest price rout in a generation due to a global oil glut.
But after crude briefly climbed over $50 a barrel in June, drillers have added 112 oil rigs. Analysts said prices over $50 would prompt energy firms to return to the well pad.
U.S. crude futures this week climbed over $50 a barrel to four-month highs, spurred by ongoing talks of an OPEC production cut.
Prices on Friday eased to just below $50 on profit-taking from the nearly 15-percent rally since the group announced plans to reduce output on Sept. 28.
Looking ahead, analysts forecast the rig count would jump higher in 2017 and 2018 when prices were expected to rise with publicly-traded energy firms planning to spend more on drilling to increase production.
Futures for calendar 2017 were trading at about $53 a barrel, while calendar 2018 was around $54.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast total oil and natural gas rig count would average 498 in 2016, 656 in 2017 and 866 in 2018.
That compares with an average of 482 oil and gas rigs active so far this year, according to Baker Hughes data. That compares with an average of 978 oil and gas rigs active in 2015.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)