U.S. energy firms this week added oil rigs for a third week in four and increased the rig count for the fifth month in a row, even though oil prices this week fell to their lowest since October 2017.
Drillers added two oil rigs in the week to Nov. 30, bringing the total count to 887, Baker Hughes, a GE company (NYSE: BHGE) said in its weekly report.
For the month, the rig count was up 12 in November, matching October and its fifth monthly increase in a row.
The U.S. rig count, an early indicator of future output, is higher than a year ago when 749 rigs were active because energy companies have spent more this year to ramp up production to capture prices that are higher in 2018 than 2017.
U.S. crude futures were trading around $51 per barrel on Nov. 30 after falling below $50 earlier this week to their lowest since October 2017 on swelling inventories.
Looking ahead, crude futures for calendar 2019 and 2020 were trading at about $52 per barrel.
U.S. crude oil output hit a new all-time high of 11.5 million barrels per day in September, the fourth consecutive month of record highs, according to the government on Nov. 30, as production in Texas and North Dakota climbed to fresh peaks.
U.S. financial services firm Cowen & Co. this week said the E&P companies it tracks have provided guidance indicating a 23% increase this year in planned capital spending.
Cowen said the E&Ps it tracks expect to spend a total of $89.1 billion in 2018. That compares with projected spending of $72.2 billion in 2017. Cowen said early 2019 capital spending budgets were mixed.
Analysts at Simmons & Co., energy specialists at U.S. investment bank Piper Jaffray, this week forecast the average combined oil and natural gas rig count would rise from 876 in 2017 to 1,031 in 2018, 1,092 in 2019 and 1,227 in 2020.
Year-to-date, the total number of oil and gas rigs active in the United States has averaged 1,028. That keeps the total count for 2018 on track to be the highest since 2014, which averaged 1,862 rigs. Most rigs produce both oil and gas.
U.S. oil drillers this week cut the most rigs since the week to Jan. 18 and reduced the number of oil rigs operating for a second week in a row.
A U.S. appeals court on March 28 supported a lower court’s finding that Italian oil producer Eni SpA breached a contract with offshore drilling contractor Transocean Ltd., but voided a $160 million damages award.
Drillers cut two oil rigs in the week to Sept. 7, bringing the total count down to 860, Baker Hughes, a GE company, said in its weekly report.