U.S. energy firms added oil and natural gas rigs for the sixth time in seven weeks as oil prices rose to their highest since 2018, although gas drillers have slowed down their activity.
The oil and gas rig count, an early indicator of future output, rose five to 461 in the week to June 11, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
That put the total rig count up 182 rigs, or 65%, over this time last year. It was also up 89% since falling to a record low of 244 in August 2020, according to Baker Hughes data going back to 1940.
In their biggest increase in a month, oil rigs rose six to 365 this week, their highest since April 2020.
Gas rigs fell one to 96, their fifth weekly cut in a row for the first time since May 2020.
“While the flattish trend may continue in the near term, we do still foresee further (rig count) gains in store as we progress into the second half of 2021 and continue to model about 450 horizontal rigs working by the end of 2021,” analysts at Tudor, Pickering, Holt & Co said.
That compares with 420 horizontal rigs in service this week, according to Baker Hughes.
U.S. crude futures were trading over $71 a barrel on Friday, putting the contract on track for its highest close since October 2018.
With prices mostly rising since October 2020, some energy firms have said they plan to boost spending in 2021 after cutting drilling and completion expenditures over the past two years.
That spending increase, however, remains small as most firms continue to focus on boosting cash flow, reducing debt and increasing shareholder returns rather than adding output.
In fact, many analysts do not expect that extra spending to boost output at all. Instead, they think it will only replace natural declines in well production.
Overall, U.S. oil production is expected to ease from 11.3 million barrels per day (bpd) in 2020 to 11.1 million bpd in 2021 before rising to 11.8 million bpd in 2022, according to government projections. That compares with the all-time annual high of 12.3 million bpd in 2019.