US rig count up for 17th straight week: Baker Hughes

The US rig count increased last week, but the rate of additions is slowing. Anadarko photo.

Oil rig count up by nine

On Friday, Baker Hughes’ weekly rig count report showed an increase of nine oil rigs in the United States, extending a 12 month drilling recovery.

According to the report, drillers increased the US rig count to 712, the highest since April, 2015.

In Canada, the rig count fell by two to 80 rigs.

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While the number of US rigs continues to grow and is more than double what it was this time last year, the rate at which they are added has slowed over the past four weeks, down to the lowest since March.

Data from the US Energy Information Administration shows US crude output is expected to increase to an average of 9.3 million barrels per day (b/d) in 2017 to a record 10 million b/d in 2018.

According to the US government, higher output from non-OPEC countries including the US, Canada and Brazil will likely limit any upside to global oil prices through to the end of 2018.

Earlier in the week, the EIA reported US crude stocks had fallen by more than expected, dropping by over 5 million barrels. Following the release of the data, US crude futures did rebound after prior loses, to trade at around $48/barrel on Friday.

Some analysts say the drop in US crude stocks is related to the OPEC supply cut on a significant drop in US crude imports.

On May 25, OPEC and non-OPEC countries participating in the cartel’s supply cut pact will meet to discuss extending the cuts to the end of 2017 and possibly into the first quarter of 2018.

In recent months, US shale drillers have been rushing to pump more crude, and as a result, OPEC has sharply raised its forecast for oil supply from non-cartel member countries in 2017.

The increase in non-OPEC output has undermined the cartel’s efforts to clear a glut and support prices by cutting supply.

Reuters reports the Texas Railroad Commission issued 909 drilling permits last month, a 33 per cent increase over the same month last year.

Futures were at around $48/barrel for the rest of 2017 and rose to $49/barrel for 2018.

According to Reuters, this week Simmons & Co analysts and energy specialists at US investment bank Piper Jaffray, forecast the total oil and gas rig count would average 858 in 2018 and 1,178 in 2019. Most wells produce both oil and gas.

So far this year, the average has been 780 and in 2016 there were 509 rigs and 978 in 2015.

The rig count peaked at 1,919 in 2012.