U.S. drillers this week added oil and natural gas rigs for the sixth time in seven weeks as demand for energy keeps growing after last year’s coronavirus demand destruction.
That rig count increase comes despite oil price declines in six of the past seven weeks.
The oil and gas rig count, an early indicator of future output, rose seven to 576 in the week to Dec. 10, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
The total rig count was still up 238, or 70%, over this time last year.
Oil rigs rose four to 471 this week, their highest since April 2020, while gas rigs rose three to 105, their highest March 2020.
U.S. crude futures were trading around $71 per barrel on Friday, putting the contract on track for its first increase in seven weeks.
Despite oil prices soaring about 47% this year, U.S. shale producers have not added to production, unlike during past periods of high prices. In part, investors have pressured oil companies to restrain drilling and return more of their profits to shareholders.
Scott Sheffield, chief executive of top U.S. shale producer Pioneer Natural Resources Co, this week said he worries oil prices could get too high and further roil markets after years of underinvestment in the sector.
Sheffield said Pioneer is holding firm on plans to grow its production by 5% in 2022, adding one to two rigs per year.
Data provider Enverus, which publishes its own rig count data, said that as of Dec. 8 Pioneer was the most active operator in the United States with 26 rigs.
Some energy firms have raised spending after cutting drilling and completion expenditures in 2019 and 2020. But much of that spending has gone to completing wells that were drilled in the past, known in the industry as DUC (drilled but uncompleted) wells.
“Heavy reliance on the DUC well count is alarming as it is a finite short-term resource, and not one that is expected to support production long-term,” analysts at Gelber and Associates said this week in a note.
U.S. oil production is expected to slide from 11.3 million barrels per day in 2020 to 11.2 million bpd in 2021 before rising to 11.9 million bpd in 2022, according to government projections. That compares with the all-time annual high of 12.3 million bpd in 2019.