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