Canadian rig count down by six
The US rig count rose for the seventh straight week, according to the Baker Hughes weekly rig count report released on Friday.
The report reflect industry sentiment as a number of energy companies, including Exxon Mobil, have said they expect to increase drilling activity to take advantage of rising crude oil prices.
In the United States, seven new oil rigs were added in the week ending March 3, bringing the total oil rig count to 609. That number is up significantly from this time last year when there were 392 rigs operational.
The number of gas rigs in the US dropped by five to a total of 146. That compares to 97 at this time last year.
In Canada, there were 197 oil rigs, nine fewer than the previous week and 138 gas rigs, three more than previously reported. At this time last year, there were 50 oil rigs and 79 gas rigs.
On Friday, crude prices recovered slightly after three days of losses. Investors are concerned about Russia’s weak compliance with the OPEC supply cut deal, making them uncertain of the viability of the pact.
OPEC members taking part in the supply cut deal, however, have mostly met their agreed upon production cuts. A Reuters survey found OPEC members had reached 94 per cent compliance with the pact in February.
Last week, US crude inventories hit record highs after eight straight weeks of increases. US production was over 9 million b/d for the second straight week, the most since April, 2016.
Despite increased inventories and drilling, analysts expect US energy firms to bump up spending on drilling and increase production in oil and natural gas shale fields.
Texas showed the largest increase in rig count, going from 386 to 392. Drillers increased the Permian Basin count by two, bringing the total to 308 and the Eagle Ford by five, up to 69.
Reuters reports analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast the total oil and gas rig count would average 815 in 2017, 933 in 2018 and 1,044 in 2019.
Cowen & Co analysts, tracking 52 E&P companies, are expecting spending by these firms to increase by an average of 50 per cent in 2017 over 2016.
The company added of 64 companies it tracks, in 2016, there was a 48 per cent drop in spending and in 2015, a 34 per cent decline in spending.