Canadian rig count (finally) rises by 23, US up for 21st straight week

rig count
Baker Hughes reports the US rig count rose for a record 21st week in a row. Chevron photo.

US output forecast to rise from 8.9 million b/d in 2016 to 9.3 million b/d in 2017 and a record 10 million b/d in 2018

On Friday, Baker Hughes reported US energy companies added oil rigs for a record 21st straight week in a row. The data from the energy services firm shows drillers added eight rigs in the week ending June 9, bringing the total number of oil rigs to 741, the highest level since April 2015.

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This time last year, there were 328 active oil rigs.

In Canada, drillers added 23 oil rigs and 10 natural gas rigs, bringing the total oil and gas rig count to 132, more than double the 65 operational rigs in Canada at this time last year.

According to Reuters, the pace of the additions has slowed due to a decline in crude prices over the past two months, with the average added over the past four weeks falling to just 7.

In Texas, the rig count dropped by three to 460, but remains well above the count at this time last year when there were 178 rigs up and running.  The state with the highest increase in the rig count was Oklahoma with an additional five rigs, New Mexico added four rigs.

In the markets, US crude futures traded around $46/barrel, putting the front-month on track to decline for the third straight week.  The global oversupply of crude is blamed on the drop in prices, despite OPEC’s efforts to reign in production.

Federal data show US producers are projected to increase output from 8.9 million barrels per day in 2016 to 9.3 million b/d in 2017 and a record 10 million b/d in 2018.

According to Reuters, futures for the balance of 2017 were trading around $46/barrel and calendar 2018 was over $47/barrel.

Simmons & Co analysts and energy specialists at Piper Jaffray this week forecast the total oil and gas rig count would average 878 in 2017, 1,092 in 2018 and 1,203 in 2018.  Most wells produce oil and gas.

If the Simmons 2019 predictions are correct, that would be the most rigs since 2014 when there were 1,862 active rigs.

Baker Hughes says the rig count peaked at 1,919 in 2012.