U.S. energy firms added oil rigs for a second week in a row as the drilling recovery continues into a 14th month, but the pace of additions has slowed to its lowest this year amid weak crude prices despite OPEC-led efforts to end a global supply glut.
Drillers added two oil rigs in the week to July 14, bringing the total count up to 765, the most since April 2015, Baker Hughes energy services firm said in its closely followed report on Friday.
That compares with 357 active oil rigs during the same week a year ago. Drillers have added rigs in 54 of the past 59 weeks since the start of June 2016.
The rate of those additions, however, has slowed over the past few months with declining oil prices. Rig additions over the past four weeks averaged five, its lowest since November 2016.
Lingering worries about global oversupply have knocked more than 10 percent off U.S. crude futures so far this year, despite a deal involving the Organization of the Petroleum Exporting Countries (OPEC) and some other major producers to curb output by about 1.8 million barrels per day (bpd) from the start of 2017 through the end of March 2018.
U.S. crude futures were trading around $46.54 a barrel, up 1 percent on Friday, boosted by a supply interruption in Nigeria and prices were headed for a weekly gain of more than 4 percent on lower U.S. stockpiles.
Analysts said those OPEC-led cuts were being frustrated by increased drilling activity and rising output from U.S. shale drillers and other producers hoping to capture higher crude prices in future months.
Futures for the balance of 2017 were trading around $47 a barrel, while calendar 2018 was fetching above $48 a barrel.
Some U.S. shale producers were using drilling joint ventures, called "DrillCos" for short, to pump more oil. DrillCos combine cash from investors like Carlyle Group with drillable-but-idle land already owned by producers.
Investors get a pledge of double-digit returns within a few years, while producers can raise productivity without spending more of their own money.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast the total oil and gas rig count would rise to an average of 892 in 2017, 999 in 2018 and 1,108 in 2019 from 509 in 2016. Most wells produce both oil and gas.
That compares with 978 in 2015. If correct, Simmons' 2019 forecast would be the most since 2014 when there were 1,862 active rigs. The rig count peaked in 2012 at 1,919, according to Baker Hughes.
The rig count is an early indicator of future output. U.S. producers are expected to boost output to 9.3 million bpd in 2017 and a record 9.9 million bpd in 2018 from 8.9 million bpd in 2016, according to federal projections.
(Reporting by Scott DiSavino and Jessica Resnick-Ault; Editing by Marguerita Choy)