U.S. energy firms this week grew the total rig count for a fourth week in a row for the first time since June 2018 as producers start drilling again with prices holding around $40 per barrel over the past few months.
The oil and gas rig count, an early indicator of future output, rose three to 269 in the week to Oct. 9, energy services firm Baker Hughes Co. said in its weekly report.
The total rig count fell to a record low of 244 rigs during the week ended Aug. 14, according to Baker Hughes data going back to 1940. This week’s rig count was 587 rigs, or 69%, below this time last year.
U.S. oil rigs rose four to 193 this week, their highest since early June, while gas rigs fell one to 73, according to Baker Hughes data.
Even though U.S. oil prices are still down about 33% since the start of the year due to coronavirus demand destruction, U.S. crude futures have gained 117% over the past five months to around $41 per barrel on Oct. 9 mostly on hopes global economies and energy demand will snap back as governments lift lockdowns.
“We’re now quite convinced that the horizontal rig count trough is officially in the rear-view mirror, and we continue to expect to see some additional (albeit modest) improvement into year-end 2020,” analysts at Tudor, Pickering, Holt & Co said this week.
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 326 in 2021 before rising to 583 in 2022.
That is the same as Simmons forecast since mid-June and implies drillers will add some rigs before the end of the year.
BP, BHP, Chevron, Equinor and Shell began withdrawing staff from their offshore oil and gas facilities in the U.S. Gulf of Mexico ahead of Tropical Storm Zeta.
BP, Chevron and Shell, among others, evacuated 157 offshore facilities and sharply cut production from the U.S. Gulf of Mexico region on Oct. 27 ahead of Hurricane Zeta.
Commercial production from non-conventional energy sources—including fracking for shale gas—is currently not permitted in Colombia.