Rig count up for tenth straight week
The rig count in the United States rose for a tenth straight week, despite pressure on oil prices from rising US production and global crude inventories, according to the weekly report issued by Baker Hughes on Friday.
Drillers added 21 oil rigs in the week ending March 24, the biggest weekly increase since Jan. 20. The US oil rig count now stands at 652, up from a six-year low of 316 in May.
In Canada, the rig count fell substantially by 91, ending at 185 for the week. That number is still 130 rigs higher than the Canadian rig count one year ago, today.
This time last year in the United States, there were 372 operational rigs.
The increase in rig counts comes at a time when US crude futures collapsed in recent weeks and Brent oil prices teetered around the $50/barrel mark. On Friday, US crude futures steadied at around $48/barrel.
US crude inventories have been building since the beginning of the year and this week, and a fresh record high was reported and production climbed to over 9.1 million b/d.
Federal energy data projects production to rise from an average of 8.9 million b/d in 2016 to 9.2 million b/d in 2017 and a record high of 9.6 million b/d in 2018.
A report by Reuters on Friday showed even though US shale producers were drilling at the highest rate in 18 months, they have left a record number of unfinished wells in the Permian basin, a sign the report says shows that output may not rise as quickly as drilling activity would indicate.
This past week, analysts at Simmons & Co, along with energy specialists at US investment bank Piper Jaffray forecast the total gas and oil rig count would average 831 in 2017, 953 in 2018 and 1,064 in 2019. That compares with an average of 731 so far in 2017.
Also this week, analysts at Cowen & Co said in a note that the financial services firm’s capital expenditure tracking showed 57 exploration and production companies were planning on increasing their spending by an average of 50 per cent in 2017 over 2016.
With the 64 E&P companies Cowen tracks, in 2016, there was an estimated 48 per cent drop in spending, and a 34 per cent drop in 2015 spending.
