June 10, 2016 / 5:07 PM / 2 years ago

U.S. oil drillers add rigs for 2nd week in a row -Baker Hughes

June 10 (Reuters) - U.S. energy firms this week added rigs
drilling for oil for a second week in a row for the first time
since August, energy services firm Baker Hughes Inc said
on Friday, after crude prices this week rallied to an 11-month
high over $51 a barrel.
    Analysts and producers have said U.S. crude prices over $50
would trigger a return to the well pad after a near two-year
slump in drilling.  
    Drillers added three oil rigs in the week to June 10,
bringing the total rig count up to 328, compared with 635 a year
ago, Baker Hughes said in its closely followed report.
    Before this week, drillers have added rigs in only two weeks
so far this year, cutting on average 10 oil rigs per week for a
total of 211.
    That compares with cuts of 18 rigs per week on average in
2015 for a total decline of 963, the biggest annual decline
since at least 1988 amid the biggest rout in crude prices in a
    The rig count has dropped since hitting a peak of 1,609 in
October 2014 as U.S. crude futures fell from over $107 a
barrel mid-2014 to a near 13-year low around $26 in February.
    Since then, crude futures have almost doubled, breaking
through $51 this week as U.S. inventories declined and on supply
worries in Nigeria. 
    On Friday, however, futures were under pressure, falling
nearly 3 percent to around $49.15, amid another rise in the rig
count and as a strong dollar weighs on demand. 
    "Barring another commodity price collapse, we do believe the
bottom is in for the rig count. We expect rig counts to remain
choppy for the remainder of the summer with potential increases
later in the third quarter to early fourth quarter," analysts at
U.S. financial service firm Cowen & Co said in a note this week.
    Cowen forecast the total oil and natural gas land rig count
would increase by about 315 rigs to 697 rigs by the fourth
quarter of 2017. While that is less than the 400-rig increase
expected by some other firms, Cowen said oil prices would have
to rise to around $63 a barrel to cause drillers to add that
many rigs.
    That is much higher than current crude futures, which are
fetching nearly $51 for the balance of 2016 and over
$52 for calendar 2017.
    "There are some signs that rigs may be returning in the best
acreage, namely the best counties in the Permian Basin,"
analysts at Morgan Stanley said in a report.

 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
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