Canadian rig count up by over 10 per cent from 102 to 119
July 29 (Reuters) – U.S. drillers this week added oil rigs for a fifth consecutive week as part of the biggest monthly rig count increase in over two years, Baker Hughes Inc said on Friday.
The oilfield services provider and some analysts, however, have cast doubts on a substantial recovery in drilling this year with U.S. crude prices heading for their biggest monthly loss in a year.
Drillers added three oil rigs in the week to July 29, bringing the total rig count up to 374, compared with 664 a year ago, according to the closely followed Baker Hughes weekly report.
The rig count rose by 44 during July, the most in a month since April 2014, signaling a recovery in U.S. drilling after the biggest price rout in a generation prompted a slump in rigs from a peak of 1,609 in October 2014.
Drillers have returned to the well pad since U.S. crude prices tipped above $50 in early June. That is the key level that analysts and producers said would prompt their return.
U.S. crude futures, however, earlier Friday slipped below $41 a barrel for the first time since April and were on track for a monthly loss of about 15 percent, pressured by persistently high inventories.
“I believe oil prices in the upper $50s at a minimum are required for a sustainable recovery in North America,” Baker Hughes Chief Executive Martin Craighead said on Thursday.
Bigger rivals Schlumberger Ltd and Halliburton Co last week both said they expected a modest recovery in North American activity.
“I don’t subscribe to the hopeful commentary,” Craighead said.
A similar price rally last year to over $60 in May-June spurred drillers to add 47 rigs in July to August.
But that return to the well pad was short-lived as prices fell to 12-year lows near $26 by February, resulting in the rig count tumbling by 359 between September 2015 and May 2016.
James Williams, President of WTRG Economics in Arkansas said in a report written this week that $43 was “close to the point” the rig count could turn down, but noted there would likely be a one- to two- month lag before a decline because of the time needed to acquire permits, rigs and crews.
“We anticipate slow rig growth. However, that is with all of the caveats about oil prices, which must stay at or above the current level,” Williams said.
Over the long-term, analysts still expect drilling to pick up with futures for calendar 2017 trading above $46 and 2018 near $49.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast the total oil and natural rig count would average 492 in 2016, 686 in 2017 and 964 in 2018.
The total oil and gas rig count bottomed at 404 in mid May, the lowest level since at least 1940, and increased by one to 463 in the week ended July 29, according to Baker Hughes data. In 2015, the total rig count averaged 978.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)