U.S. energy firms this week added oil and natural gas rigs for a second week in a row as crude production returned to pre-pandemic levels and President Joe Biden slammed oil producers for profiting from sky-high prices instead of boosting output.
The oil and gas rig count, an early indicator of future output, rose seven to 740 in the week to June 17, its highest since March 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
Oil rigs rose four to 584 this week, their highest since March 2020, while gas rigs gained three to 154, their highest since September 2019.
Even though the rig count has climbed for a record 22 months in a row through May, weekly increases have incremental and crude production has been largely stagnant over the last few months. Data this week showed it edged up 100,000 barrels per day last week to 12 million bpd, its highest level since April 2020.
Total output in the major U.S. shale oil basins will rise 143,000 bpd to 8.901 million bpd in July, the highest since March 2020, the government projected.
Meanwhile, Biden in the past week slammed oil producers for doling out billions to shareholders and building cash reserves, instead of boosting output, a strategy irking lawmakers and voters as inflation surges to its highest in 40 years.
Crude prices are up about 46% so far this year to about $110 a barrel, mainly boosted by a cut in Russian supplies after sanctions were imposed on Moscow after it invaded Ukraine on Feb. 24.
The tradeoff between rising payouts for just a single quarter and more spending on production has deprived the market of nearly half a million barrels of new oil daily, based on Reuters’ estimates of potential output if half of existing investor payouts flowed to new oil and gas drilling.
Those extra barrels could lift U.S. production this year beyond the pre-pandemic annual record of 12.23 million bpd in 2019. The government projects output to rise 720,000 bpd to 11.92 million bpd in 2022.