May 26, 2017 / 5:13 PM / a year ago

U.S. drillers add oil rigs in a record streak but pace slows -Baker Hughes

    By Scott DiSavino
    May 26 (Reuters) - U.S. energy firms added oil rigs for a
record 19 weeks in a row as expectations of higher crude prices
after an OPEC-led decision to extend current output curbs
motivate producers to boost spending on new drilling.
    The pace of those additions, however, has slowed with the
total added so far in May falling to the lowest since October
due to soft oil prices.    
    Drillers added two oil rigs in the week to May 26, bringing
the total count up to 722, the most since April 2015, energy
services firm Baker Hughes Inc         said on Friday.
    That is more than double the same week a year ago when there
were only 316 active oil rigs, the least in more than six years.
    The 19 weeks of rig increases matches the longest streak of
consecutive additions on record, which ended in August 2011,
according to Baker Hughes data going back to 1987.
    U.S. crude futures        were trading below $50 a barrel on
Friday, after plunging nearly 5 percent on Thursday following an
OPEC-led decision to extend current production curbs that
investors gauged did not go far enough to reduce a global supply
    After agreeing in December to cut production by around 1.8
million barrels per day for the first six months of the year,
the Organization of the Petroleum Exporting Countries and other
producers agreed to extend those curbs for another nine months
through the end of March 2018.             
    Some analysts expect the extended cuts will likely lead to
the acceleration of output from U.S. shale oil basins, where
producers can operate at much lower costs. 
    "As a consequence of the extension of the cuts, we are
likely to see a more supportive oil price and yet more U.S.
shale oil rigs being added to the market over the coming nine
months," said Bjarne Schieldrop, chief commodities analyst at 
Nordic corporate bank SEB. "In our view, this is likely to flip
the global supply/demand balance for 2018 and 2019 into
    Futures for the balance of 2017           and calendar 2018
          were both fetching around $50 a barrel.
    Analysts at U.S. financial services firm Cowen & Co said in
a note this week that its capital expenditure tracking showed 60
exploration and production (E&P) companies planned to increase
spending by an average of 51 percent in 2017 over 2016.
    That expected 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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