U.S. energy firms this week added oil and natural gas rigs for a third week in a row as demand for energy keeps growing after last year’s coronavirus demand destruction.
The oil and gas rig count, an early indicator of future output, rose seven to 586 in the week to Dec. 23, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Thursday.
Baker Hughes released the rig count a day early, on Thursday, due to the Christmas holiday.
Even though the rig count has been rising for a record 16 months in a row, analysts noted production was still expected to ease in 2021 as energy firms continue to focus more on returning money to investors rather than boosting output.
That puts the total rig count up 238 rigs, or 68%, over this time last year.
U.S. oil rigs rose by five to 480 this week, their highest since April 2020, while gas rigs rose by two to 106, their highest since March 2020.
U.S. crude futures were trading around $74 per barrel on Thursday, putting the contract on track for a strong weekly rise.
With oil prices up about 51% this year, some energy firms said they plan to boost spending in 2021 and 2022 after cutting drilling and completion expenditures in 2019 and 2020.
That spending increase, however, remains small and much of the money was put toward completing wells that were drilled in the past, known in the industry as DUC (drilled but uncompleted) wells.
Most firms continue to focus on boosting cash flow, reducing debt and increasing shareholder returns rather than adding output.
U.S. oil production is expected to slide from 11.3 million barrels per day (bpd) 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.