UPDATE 2-U.S. oil drillers add rigs for 1st week in five - Baker Hughes

Fri Dec 18, 2015 3:01pm EST
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(Adds quotes from head of oil consultancy)
    Dec 18 (Reuters) - U.S. energy firms this week added the
most oil rigs since July, breaking a string of four weekly
declines, data showed on Friday, despite a collapse in crude
    Drillers added 17 oil rigs in the week ended Dec. 18,
bringing the total up to 541, oil services company Baker Hughes
Inc said in its closely followed report.
    That is about a third of the 1,536 oil rigs operating in
same week a year ago. Since the end of the summer, drillers have
cut 134 oil rigs.
    "This is a one-off, not a signal that the rig count has
bottomed. You have to look at the trends and the trend is still
showing a decline," said Jim Ritterbusch, founder of
Chicago-based oil consultancy Ritterbusch & Associates.
    In the minutes after Baker Hughes released the report, U.S.
crude futures fell 20 cents to $34.29 a barrel, the
lowest level since February 2009, before paring losses.
    Bearish sentiment driven by oversupply has rattled the
market and was set to lead prices to a third straight weekly
drop, the longest losing streak in four months. 
    "We need to see an some declines in production before the
rig count can really increase," Ritterbusch said.
    U.S. oil production held at 9.4 million barrels per day in
September, the same as August, according to federal energy data.
    The rig count increase this week, however, showed that at
least some drillers were willing to start drilling again even
with U.S. oil prices trading below $40 a barrel, in hopes of
higher prices in the future.
    U.S. crude futures for next year were trading around $40 a
barrel, down from $42 last week, according to the full year 2016
calendar strip on the New York Mercantile Exchange.
    Higher prices encourage drillers to add rigs. The most
recent period crude prices were much higher than now was in May
and June, when U.S. futures averaged $60 a barrel.
    In response to those higher prices, drillers added 47 rigs
over the summer.
    This week rigs were added in three of the four major U.S.
shale oil basins. Drillers added 5 rigs in the Permian in West
Texas and eastern New Mexico; two in the Eagle Ford in South
Texas and one in the Niobrara in Colorado and Wyoming. The
number of rigs in the Bakken in North Dakota and Montana
remained the same.

 (Reporting by Scott DiSavino; Editing by Tom Brown)