U.S. energy firms this week added oil and natural gas rigs for a third week in a row, as a recovery in oil prices prompted some drillers to return to the wellpad over the past year.
The oil and gas rig count, an early indicator of future output, rose three to 503 in the week to Aug. 20, its highest since April 2020, Baker Hughes Co. said in its weekly report.
That puts the total rig count nearly double from the same period last year when the rig count was 254.
U.S. oil rigs rose eight to 405 this week, their highest since April 2020, while gas rigs fell five to 97, registering their biggest weekly decline in 16 months.
U.S. crude futures were trading around $63 per barrel Aug. 20, sliding for a seventh straight session toward three-month lows due to surging COVID-19 Delta variant cases that is hitting travel.
With oil prices up about 29% 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.
In fact, many analysts do not expect that extra spending to boost output at all. Instead, they think it will only replace natural declines in well production.
U.S. shale oil output is expected to rise to 8.1 million barrels per day (MMbbl/d) in September, the highest since April 2020, according to the Energy Information Administration’s monthly drilling productivity report on Monday.
Total oil production, however, is expected to slide to 11.1 MMbbl/d in 2021 from 11.3 MMbbl/d in 2020, before rising to 11.8 MMbbl/d in 2022, according to government projections. That compares with the all-time annual high of 12.3 MMbbl/d in 2019.
Recommended Reading
US Gulf Coast Heavy Crude Oil Prices Firm as Supplies Tighten
2024-04-10 - Pushing up heavy crude prices are falling oil exports from Mexico, the potential for resumption of sanctions on Venezuelan crude, the imminent startup of a Canadian pipeline and continued output cuts by OPEC+.
Paisie: Economics Edge Out Geopolitics
2024-02-01 - Weakening economic outlooks overpower geopolitical risks in oil pricing.
US Refiners to Face Tighter Heavy Spreads this Summer TPH
2024-04-22 - Tudor, Pickering, Holt and Co. (TPH) expects fairly tight heavy crude discounts in the U.S. this summer and beyond owing to lower imports of Canadian, Mexican and Venezuelan crudes.
What's Affecting Oil Prices This Week? (Feb. 26, 2024)
2024-02-26 - Stratas Advisors forecast that global crude production will be essentially unchanged from 2023, which means that demand growth in 2024 will outpace supply growth.
Kissler: The Challenge for Oil is Falling Demand, Despite Heightened Middle East Conflicts
2024-02-09 - Even though demand is the bigger weight on traders’ minds right now, Red Sea attacks and the U.S.’ “shadow war” with Iran still have the potential to impact the global oil supply, and consequently, prices.