(Adds basin counts)
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.
Drillers added rigs in all of the major U.S. shale oil basins - three in the Eagle Ford in South Texas, two in the Bakken in North Dakota and Montana, and one each in the Niobrara in Colorado and Wyoming and the Permian in West Texas and eastern New Mexico.
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 pared Thursday’s gains by about 50 cents after Baker Hughes released the rig count, leaving the contract up about 0.3 percent on the day.
That followed a $2.50 loss 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.
Last year, U.S. crude prices fell from around $107 in June 2014 to near $42 in March on oversupply concerns as producers in the United States, the Organization of the Petroleum Exporting Countries and elsewhere pulled near record amounts of oil out of the ground despite lackluster world demand.
In response to that 60 percent price collapse, U.S. drillers eliminated thousands of jobs and idled more than half of the record high 1,609 oil rigs that were active in October.
Despite the cuts, U.S. crude production averaged 9.6 million barrels per day, its highest level since the early 1970s, for a sixth week in a row, according to government data. (Reporting by Scott DiSavino; Editing by Marguerita Choy)