U.S. oil rig count rises for first time since December-Baker Hughes

Thu Jul 2, 2015 1:17pm EDT
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By Scott DiSavino

July 2 (Reuters) - U.S. oil drilling this week increased for the first time after 29 weeks of declines, data showed on Thursday, the strongest sign yet that higher crude prices are coaxing producers back to the well pad.

The oil rig count rise of 12 to 640 followed a six-month slump in activity that reduced the number of active rigs from a peak of 1,609 in October to a nearly five-year low last week, energy services firm Baker Hughes Inc said in its closely followed report.

Baker Hughes issued the report a day early this week due to the U.S. Fourth of July holiday on Friday.

Experts had expected the rig count to bottom out soon and then rise later in the year.

"We believe about 100 rigs could be added to the U.S. rig count between now and year-end," analysts at Evercore ISI, a banking advisory firm, said in a report this week, noting "The bottom is passing and the upturn is arriving."

U.S. crude futures traded around $58 a barrel on Thursday after losing about $2.50 on Wednesday due to an unexpected build in U.S. crude stocks that added to the global supply glut. For the past two months since the start of May, prices have averaged around $60 a barrel.

Keeping prices near $60 is important because that is the price at which many U.S. drillers said they would return to the well pad.

"We believe that should (U.S. crude) prices remain near $60 a barrel, U.S. producers will ramp up activity given improved returns with costs down nearly 30 percent," analysts at Goldman Sachs, a bank, said in a report.   Continued...