New York: US energy companies added oil rigs for a second week in a row as crude prices hovered near their highest levels since 2014, prompting drillers to return to the well pad.
Drillers added 6 oil rigs in the week to February 2, bringing the total count up to 765, the highest level since August 2017, General Electric Co’s Baker Hughes energy services firm said in its closely followed report.
The US rig count, an early indicator of future output, is much higher than a year ago when 583 rigs were active after energy companies started to boost spending in mid-2016 as crude were recovering from a two-year price crash.
US crude futures traded around $65 (Dh238.74) a barrel this week, near their highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016.
Looking ahead, futures were trading around $63 for the balance of 2018 and $58 for calendar 2019.
In anticipation of higher prices in 2018 than 2017, US financial services firm Cowen & Co said 30 of the roughly 65 E&Ps they track, including Hess Corp, have already provided capital expenditure guidance indicating a 5 per cent increase in planned spending over 2017.
Hess said it would spend $2.1 billion in 2018 mostly in North Dakota and Guyana, keeping its capital budget unchanged form 2017.
Cowen said the E&Ps it tracks planned to spend about $66.1 billion on drilling and completions in the lower 48 US states in 2017, about 53 per cent over what they planned to spend in 2016.
Analysts at Simmons & Co, energy specialists at US investment bank Piper Jaffray, this week slightly increased their forecast the total oil and natural gas rig count to an average of 1,006 in 2018 and 1,131 in 2019. Two weeks ago, they forecast 1,004 in 2018 and 1,128 in 2019.
There were 946 oil and natural gas rigs active on Feb 2. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
The US Energy Information Administration in January projected US production would rise to a record high annual average of 10.3 million barrels per day in 2018 and 10.9 million bpd in 2019, up from 9.3 million bpd in 2017.
The current all-time US output annual peak was in 1970 at 9.6 million bpd, according to federal energy data.