U.S. oil drillers add one rig after 12 weeks of cuts -Baker Hughes

Fri Mar 18, 2016 1:10pm EDT
 
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March 17 (Reuters) - U.S. energy firms this week added one
oil rig after 12 weeks of cuts, data showed on Friday, even
though some analysts expect rig counts to decline further over
the next few months before rebounding later in the year.
    The total rig count rose to 387 in the week to March 18,
compared with 825 oil rigs operating in the same week a year
ago, oil services company Baker Hughes Inc said in its
closely followed report. RIG-OL-USA-BHI
   In 2015, drillers cut on average 18 oil rigs per week for a
total of 963 for the year, the biggest annual decline since at
least 1988.
    Before this week, drillers cut on average 15 oil rigs per
week so far this year.
    The additions this week showed that at least some producers
were willing to start drilling again in hopes oil prices would
rise in the future.
    Energy firms have sharply reduced oil and gas drilling since
the selloff in global crude markets began in mid-2014.
    Still, many analysts think the combined rig count will
rebound later this year with signs that prices have bottomed
after U.S. crude futures hit a 12-year low of $26.05 a
barrel in February and U.S. gas futures fell to a near
18-year low of $1.611 per million British thermal units earlier
in March.
    Since hitting those lows, U.S. oil futures have soared over
50 percent to around $40 a barrel, while U.S. gas gained about 
20 percent to around $1.917 per mmBtu.
    "We expect an upward sloping futures curve to drive some
recovery in activity, stabilizing U.S. oil production levels in
the mid 8 (million barrels per day) range," analysts at Cowen &
Co, a financial services firm, said in a note this week.
    U.S. crude futures for the balance of 2016 were
fetching around $43 a barrel.
    "Producers may begin to hedge at that price level, in some
cases to appease reserve lenders, supporting our view of
increased rig activity toward the end of 2016 and throughout
2017," Cowen said.
    After lowering its estimates due to reduced exploration and
production company spending, Cowen forecast combined oil and gas
land rigs would bottom in the 375 to 400 range before edging up
to 401 at the end of 2016 and 739 at the end of 2017. There were
450 active U.S. land rigs on March 11, according to Baker
Hughes.
    U.S. crude production was expected to fall from 9.4 million
barrels per day in 2015 to 8.7 million bpd in 2016 and 8.2
million bpd in 2017, according to the latest federal estimates.
    

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)