U.S. oil rigs rise in best quarter in two years -Baker Hughes

Fri Sep 30, 2016 1:05pm EDT
 
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Sept 30 (Reuters) - U.S. drillers in the third quarter added
the most oil rigs of any quarter since 2014, according to a
closely followed report on Friday, but the pace of additions has
slowed as crude holds below $50 a barrel despite OPEC's first
plan in eight years to cut output.
    Drillers added seven oil rigs in the week to Sept. 30,
bringing the total rig count up to 425, the most since February
but still below the 614 rigs seen a year ago, energy services
firm Baker Hughes Inc said. RIG-OL-USA-BHI
    For the quarter, they added 95 rigs, the most since drillers
added 105 rigs in the first quarter of 2014.
    The oil rig count plunged from a record high of 1,609 in
October 2014 to a low of 316 in May after crude prices collapsed
in the biggest price rout in a generation due to a global oil
glut. That decline continued through the first half of this year
when drillers cut 206 rigs.
    So far this quarter, however, drillers have added or at
least not removed any oil rigs for 14 weeks in a row, the
longest streak of not cutting rigs since 2011. That was also the
third longest streak of not cutting rigs since 1987, following a
19-week streak in 2011 and a 17-week streak ended in 2010.
    U.S. crude futures were on track to their largest
weekly advance in more than month on Friday at above $48 per
barrel after the Organization of the Petroleum Exporting
Countries agreed to cut output, edging closer to the $50-mark
that drillers say make a return to the well pad viable. 
    In the short-term, analysts noted the rig count could
decline if small, privately held operators pull back on drilling
plans, choosing to conserve capital if prices remain low.
 
    Longer-term, however, analysts forecast the rig count would
jump higher in 2017 and 2018 when prices were expected to rise
as bigger publicly-traded operators boost spending on drilling
to increase production.
    Futures for calendar 2017 were trading above $51 a
barrel, while calendar 2018 was above $53.
    Platts RigData, a forecasting unit of S&P Global Platts, 
projected total oil and natural gas land rigs would rise from an
average of 449 in 2016 to 579 in 2017 and 676 in 2018 as energy
prices increase. That compares with an average of 883 rigs in
2015.

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)