Total US rig count rises to 789, Canadian rig count drops by 39
The total US rig count rose by 21 last week, extending the recovery that has seen a boost in shale production.
Baker Hughes reports drillers added 14 oil rigs in the week ending March 17, bringing the total count to 631, the highest since September, 2015. The total rig count in the United States was 789.
In the same week last year, there were 387 operational rigs.
According to Baker Hughes, the Canadian rig count fell considerably from 315 to 276.
The increase in the US rig count comes despite a collapse in crude futures over the past two weeks to a more than three-month low. Decisions were made to activate rigs this week a couple of months ago when commodity prices were higher.
On Friday, US crude futures were at about $49/barrel and were expected to see a weekly rise after falling 9 per cent last week. Futures dropped on concerns that OPEC production cuts were failing to reduce the global supply glut and US shale producers increased production.
Since May, producers have added a total of 315 rigs, the biggest recovery in rigs since the global oil glut slammed the market beginning in 2014.
On Monday, government data showed US shale production is expected to rise 190,000 b/d in April to 4.96 million b/d, mostly due to increased output in the Permian Basin.
The Energy Information Agency reported a drop in US crude inventories this week after nine straight weeks of increases. Federal data shows overall production is expected to rise from 8.9 million b/d in 2016 to 9.2 million b/d in 2017 and to a record high of 9.6 million b/d in 2018.
As energy prices continue to climb, analysts expect US energy companies to increase spending on drilling and pump more oil and natural gas from shale fields in the coming years.
Crude futures for the remainder of 2017 and calendar 2018 were both trading around $50/barrel.
Reuters reports analysts at Simmons & Co and energy specialists at Piper Jaffray forecast the total oil rig and gas rig count would average 818 in 2017, 937 in 2018 and 1,048 in 2019.
That compares with 729 so far in 2017, 509 in 2016 and 978 in 2015 according to Baker Hughes data.
As far as capital expenditures, analysts at Cowen & Co said in a note that tracking showed 54 exploration and production companies planned to increase spending by an average of 50 per cent in 2017 over 2016.