U.S. energy firms added oil and natural gas rigs for a fourth week in a row for the first time since May, spurred by higher oil prices although growth in drilling has been modest as producers favor spending austerity.
The oil and gas rig count, an early indicator of future output, rose seven to 491 in the week to July 23, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
“Although total rigs are… double, the amount recorded at the low point in mid-August of last year, drilling activity remains historically low, and one would have to return to August of 2016 (excluding last year) to find a lower rig count,” analysts at Gelber & Associates in Houston said in a note.
U.S. oil rigs rose seven to 387 this week, their highest since April 2020, while gas rigs were unchanged at 104.
U.S. crude futures were on track to end the week near $72 a barrel on Friday, little changed from last week, when it hit its highest October 2018.
With oil prices up 48% so far this year, several energy firms have said they plan to raise spending, which however, remains small as most firms continue to focus on boosting cash flow, reducing debt and increasing shareholder returns.
“Despite elevated oil and gas prices at times this year, drilling in many regions remains at maintenance levels. Significant rig additions are still necessary to overcome natural declines and sustain production growth later this year,” the Gelber analysts said.
Baker Hughes Chief Executive Lorenzo Simonelli anticipates companies will add around 50 rigs in North America through the end of the year, with private companies picking up activity at current price levels.
Energy services firms are benefiting from a resumption of drilling driven by rising crude prices, and Schlumberger and Halliburton this week delivered a bullish outlook for the oil industry recovery.
But U.S. oil output may not reach pre-pandemic levels until after 2022, Schlumberger CEO Olivier Le Peuch said.
Enverus, a provider of energy data with its own closely watched rig count, said the number of active rigs jumped by 24 to 562 in the week to July 21 with the largest increases in Permian, up by 11 to 228, and the Anadarko Basin, with an eight-rig increase to 48.