US Oil Drillers Add Rigs for First Week in 11

U.S. energy firms this week added oil rigs for the first week in 11, data showed on Friday, despite continued weak crude prices.

 

Drillers added 2 oil rigs in the week ended Nov. 13, bringing the total rig count up to 574, oil services company Baker Hughes Inc said in its closely followed report.

 

That total is about a third of the 1,578 oil rigs operating in same week a year ago. Over the prior 10 weeks, drillers cut 103 oil rigs.

 

The additions this week showed that at least some drillers were willing to start drilling again even with U.S. oil prices trading in the $40s a barrel in hopes of higher prices in the future.

 

U.S. oil futures averaged $43 a barrel so far this week, down from $46 last week.

 

Crude futures were on track for their biggest weekly loss in more than two months as swelling stocks weighed on the market. In the minutes after Baker Hughes released the report, U.S. crude prices dipped about 20 cents to around $40.50 a barrel.

 

Energy traders noted the rate of weekly oil rig reductions over the past two months, about 10 on average, was much lower than the 19 rigs cut on average over the past year or so since the number of rigs peaked at 1,609 in October 2014, due in part to expectations of slightly higher prices in the future.

 

U.S. crude futures for next year were trading around $46 a barrel, according to the full year 2016 calendar strip on the New York Mercantile Exchange. That however was down from $49 last week.

 

Higher prices encourage drillers to add rigs. The most recent time crude prices were much higher than now was in May and June, when U.S. futures averaged $60 a barrel.

 

In response to those higher prices, drillers added 47 rigs over the summer.

 

Drillers added rigs in just one of the four major U.S. shale oil basins this week. They added one in the Eagle Ford in South Texas, while removing two in the Permian in West Texas and eastern New Mexico and one in the Bakken in North Dakota and Montana. The number of rigs in the Niobrara in Colorado and Wyoming remained unchanged.

 

Despite the increase in oil rigs this week, total oil and natural gas rig count slid to a fresh 13-year low due to a decline of six gas rigs.