U.S. energy companies added oil rigs for the first week in seven after a 14-month drilling recovery stalled in August as crude prices were on track for their strongest third quarter in 10 years.
The U.S. oil rig count, however, is down for the second month in a row and posted its biggest monthly and quarterly declines since the second quarter of 2016.
Drillers added six oil rigs in the week to Sept. 29, bringing the total count up to 750, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
The rig count, an early indicator of future output, is still higher than the 425 active oil rigs a year ago as energy companies pursued ambitious spending programs for 2017.
For the month of September, the rig count fell by nine, after dropping by seven in August.
This is the first consecutive monthly reduction since May 2016, after which the drilling recovery took off because of higher oil prices.
The rig count also dropped by six in the third quarter, the first decline over a three-month period since the second quarter of 2016.
U.S. crude futures have risen to around $52 per barrel this week due to supply concerns, including a global producer’s deal to curb output.
Crude prices were up over 9 percent so far this month, the biggest monthly increase since April 2016, after declining in five of the past six months, including a near 6 percent drop in August as rising U.S. output helped to add to a global glut.
In spite of higher oil prices, Total SA this week adjusted its capital expenditure plans for 2017 to $14 billion, the low end of its previous $14-$15 billion range.
Although several exploration and production (E&P) companies have trimmed their investments for this year due to the drop in crude prices, they still planned to spend much more this year than last year.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week revised higher its forecast for the total oil and gas rig count, now expecting it to rise to an average of 973 in 2017, 1,004 in 2018 and 1,084 in 2019. Last week, it forecast 881 in 2017, 959 in 2018 and 1,114 in 2019.
That compares with 861 oil and gas rigs so far in 2017, 509 in 2016 and 978 in 2015.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)