Drillers added 10 oil rigs in the week to Aug. 10, bringing the total count to 869, the highest level since March 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
That rig count increase occurred desite U.S. crude prices being on track to fall for a sixth week in a row for the first time since August 2015 on worries trade tensions between the United States and China could hurt oil demand.
The U.S. rig count, an early indicator of future output, is higher than a year ago when 768 rigs were active as energy companies have been ramping up production in anticipation of higher prices in 2018 than previous years.
So far this year, U.S. oil futures have averaged $66.28 per barrel. That compares with averages of $50.85 in 2017 and $43.47 in 2016.
Looking ahead, crude futures were trading near $67 for the balance of 2018 and over $64 for calendar 2019 .
In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies it tracks, including Anadarko Petroleum Corp , Apache Corp and Cabot Oil and Gas Corp , have provided guidance indicating an 18 percent increase this year in planned capital spending.
In recent weeks, Anadarko, Apache, Cabot and other energy firms have boosted the amount of capital they plan to spend on drilling and completions in 2018.
Cowen said the E&Ps it tracks now expect to spend a total of $85.2 billion in 2018, up from an estimate of $83.6 billion last week. That compares with projected spending of $72.2 billion in 2017.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the average combined oil and natural gas rig count would rise from 876 in 2017 to 1,032 in 2018, 1,092 in 2019 and 1,227 in 2020, the same as last week.
Since 1,057 oil and gas rigs were already in service, drillers would only have to add a handful of rigs during 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 1,012. 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.
The U.S. Energy Information Administration (EIA) this month projected average annual U.S. production will rise to a record high 10.7 million barrels per day (bpd) in 2018 and 11.7 million bpd in 2019 from 9.4 million bpd in 2017.
The current all-time U.S. annual output peak was in 1970 at 9.6 million bpd, according to federal energy data.