(Reuters) – U.S. energy companies added oil rigs for a second week in a row even though crude prices have declined about 7 percent over the past two weeks and analysts do not expect any big changes in the rig count for the rest of the year.
Drillers added two oil rigs in the week to June 1, bringing the total count to 861, the highest level since March 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
That was the eighth time drillers added rigs in the past nine weeks.
The U.S. rig count, an early indicator of future output, is much higher than a year ago when 733 rigs were active as energy companies have been ramping up production in tandem with OPEC’s efforts to cut global output in a bid to take advantage of rising prices.
U.S. crude futures fell below $66 a barrel this week, their lowest level since April 17, as U.S. output comes close to matching that of top dog Russia. Just last week, U.S. futures traded over $72 a barrel, their highest since November 2014.
U.S. crude oil production hit a record 10.8 million barrels per day (bpd) last week, while on a monthly basis, it peaked at 10.47 million bpd in March, the Energy Information Administration (EIA) said in separate reports on Thursday.
Production in Texas rose by 4 percent to almost 4.2 million bpd, a record high based on the data going back to 2005. The Permian basin, which stretches across West Texas and eastern New Mexico, is the largest U.S. oilfield.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast average total oil and natural gas rig count would rise to 1,025 in 2018 and 1,125 in 2019. Last week, Simmons forecast the count would rise to 1,020 in 2018 and 1,125 in 2019.
With the boost in rigs so far this year, analysts were not as bullish on further increases.
Since 1,060 oil and gas rigs were currently in service, drillers would not have to add any more rigs for the rest of the year to hit Simmons’ forecast for 2018.
So far this year, the total number of oil and gas rigs active in the United States has averaged 993, up sharply from 2017’s average of 876. That keeps the total count for 2018 on track to be the highest since 2014, which averaged 1,862 rigs. Most rigs produce both oil and gas.
Looking ahead, crude futures were trading below $66 for the balance of 2018 and nearly $63 for calendar 2019.
In anticipation of higher prices, U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies they track have provided guidance indicating a 13 percent increase this year in planned capital spending.
Cowen said those E&Ps expect to spend a total of $81.2 billion in 2018, up from an estimated $72.1 billion in 2017.