February 17, 2017 / 6:06 PM / 7 months ago

U.S. drillers add oil rigs for fifth straight week -Baker Hughes

    Feb 17 (Reuters) - U.S. energy companies added oil rigs for
a fifth straight week, extending a nine-month recovery as
drillers take advantage of crude prices that have held mostly
over $50 a barrel since OPEC agreed to cut supplies in late
November.
    Drillers added six oil rigs in the week to Feb. 17, bringing
the total count up to 597, the most rigs since October 2015,
energy services firm Baker Hughes Inc         said on Friday.
RIG-OL-USA-BHI
    During the same week a year ago, there were 413 active oil
rigs.
    Since crude prices first topped $50 a barrel in May after
recovering from 13-year lows last February, drillers have added
a total of 281 oil rigs in 34 of the past 38 weeks, the biggest
recovery in rigs since a global oil glut crushed the market over
two years starting in mid 2014.
    Baker Hughes oil rig count plunged from a record 1,609 in
October 2014 to a six-year low of 316 in May as U.S. crude
collapsed from over $107 a barrel in June 2014 to near $26 in
February 2016.
    U.S. crude futures        traded around $53 a barrel on
Friday, putting the contract on track to fall for the first week
in five, as record high U.S. crude stocks and rising production
undermine efforts by the Organization of the Petroleum Exporting
Countries (OPEC) and other producers to drain a global oil glut.
     
    U.S. shale oil production for March is expected to rise by
nearly 79,000 barrels per day - the most in five months - to 
4.87 million bpd, its highest rate since May last year,
government data showed on Monday.             
    Analysts said they expect U.S. energy firms to boost
spending on drilling and pump more oil and natural gas from
shale fields in coming years now that energy prices are
projected to keep climbing.
    Futures for the balance of 2017           were trading
around $54 a barrel, while calendar 2018           was fetching
less than $54.50.
    BofA Merrill said this week U.S. shale oil production could
grow by 3.5 million bpd to 2022, delivering more than 80 percent
of incremental non-OPEC barrels.             
    Shale producers, however, are facing their first production
cost hike in five years as industry activity picks up and energy
service providers hike fees to take a bigger share of the
profits generated by higher oil prices. The break-even
production costs will rise an average of $1.60 to $36.50 per
barrel this year, according to data from Rystad Energy, which
surveys producers.             
    Analysts at U.S. financial services firm Cowen & Co said in
a note this week that its capital expenditure tracking showed 37
exploration and production (E&P) companies planned to increase
spending by an average of 45 percent in 2017 over 2016.
    That spending increase in 2017 followed an estimated 48
percent decline in 2016 and a 34 percent decline in 2015, Cowen
said according to the 64 E&P companies it tracks.    

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
  
 
 

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