U.S. energy firms added oil and natural gas rigs for a second week in a row as oil prices recently rose to their highest since Oct. 2018, prompting some drillers to return to the well pad.
The oil and gas rig count, an early indicator of future output, rose 4 to 479 in the week to July 9, 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 221 rigs, or 85.7%, higher than this time last year. It was also up 49% since falling to a record low of 244 in August 2020, according to Baker Hughes data going back to 1940.
U.S. oil rigs rose 2 to 378 this week, their highest since April 2020, and gas rigs also rose 2 to 101.
“We’re in a new world- there’s lot of concerns about regulatory issues, so they’re going to be very cagey on raising rig counts and if you’re not going to raise it with the type of run up we’ve seen in oil supplies, you’re probably not going to rise much at all,” said Phil Flynn, senior analyst at Price Futures Group in Chicago
With oil prices up 46% so far this year, some energy firms have said they plan to boost spending in 2021 after cutting expenditure 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.
Many analysts said that rather than boosting output, the extra spending may only replace natural declines in well production.
U.S. crude oil production is expected to fall by 210,000 barrels per day in 2021 to 11.10 million bpd, the U.S. Energy Information Administration said on Wednesday.