U.S. energy firms this week added oil and natural gas rigs for a fourth week in a row as producers keep returning to the wellpad with crude prices trading over $45/bbl since late November.
The oil and gas rig count, an early indicator of future output, rose 8 to 346 in the week to Dec. 18, the highest since May, energy services firm Baker Hughes Co. said in its closely followed report.
That was still 467 rigs, or 57%, below this time last year.
The number of operating rigs has surged since August, when it hit a record low of 244, according to Baker Hughes data going back to 1940.
U.S. oil rigs rose 5 to 263 this week, their highest since May, while gas rigs rose 2 to 81, their highest since May, according to Baker Hughes data.
More than half the U.S. oil rigs are in the Permian Basin in West Texas and eastern New Mexico where total units rose six to 174 this week, the most since May. That put the rig count in the basin up for a ninth week in a row for the first time since June 2017.
U.S. crude traded around $49/bbl this week, which is the highest WTI has traded since February.
Even though the oil contract was down about 20% since the start of the year, it was still up about 160% over the past eight months on hopes global economies and energy demand will return as more governments relax coronavirus lockdowns.
Simmons Energy, energy specialists at U.S. investment bank Piper Sandler, forecast the U.S. rig count would fall from an annual average of 943 in 2019 to 431 in 2020 and 369 in 2021 before rising to 567 in 2022.
That compares with Simmons previous forecast for an average of 326 rigs in 2021 and 583 in 2022.
Looking forward, most energy firms have said they plan to cut spending in 2020 and 2021 as they continue to focus on improving earnings rather than just boosting output.
U.S. financial services firm Cowen & Co. said the 45 independent E&P companies it tracks plan to slash spending by about 48% in 2020 versus 2019. That follows a capex reduction of roughly 12% in 2019 and an increase of around 23% in 2018.
Cowen also said that some E&Ps issued early estimates for 2021 that so far point to a 6% drop in spending next year versus 2020.
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