March 10, 2017 / 6:11 PM / in 5 months

U.S. oil rig count rises to most since Sept. 2015 -Baker Hughes

    March 10 (Reuters) - U.S. drillers added oil rigs for an
eighth week in a row to the most since September 2015, extending
a ten-month recovery as energy companies boost spending to take
advantage of a recovery in crude prices since OPEC agreed to cut
production late last year.
    Drillers added eight oil rigs in the week to March 10,
bringing the total count up to 617, versus 386 rigs a year ago,
energy services firm Baker Hughes Inc         said on Friday.
RIG-OL-USA-BHI
    The increase came despite a collapse in crude futures this
week to a three-month low because the rigs activated this week
were based on decisions made a couple of month ago when oil
prices were higher.
    "We will not see the impact of this week's crude price
collapse for another couple of months," James Williams,
president of energy consultant WTRG Economics in Arkansas, said,
noting "if crude prices rebound next week, this week's price
drop won't matter at all as far as the rig count is concerned."
    U.S. crude futures        steadied around $48 a barrel on
Friday after falling this week to its lowest since November,
pressured by ample supplies in the U.S., despite production cuts
led by the Organization of the Petroleum Exporting Countries
(OPEC).      
    Since crude prices first topped $50 a barrel in May after
recovering from 13-year lows in February 2016, drillers have
added a total of 301 oil rigs in 37 of the past 41 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 2016 as U.S. crude
collapsed from over $107 a barrel in June 2014 to near $26 in
February 2016.
    Marathon Oil Corp         said on Wednesday it will spend
$1.1 billion for about 70,000 acres in the Permian basin in
Texas, where it plans to immediately boost spending by adding a
drilling rig.                          
    The move comes as Exxon Mobil Corp       , Pioneer Natural
Resources Co         and others have ramped up operations in the
Permian, one of the cheapest places to pump oil in the United
States.
    Additionally, U.S. shale oil producers said this week at the
CERAWeek conference in Houston they are plotting ambitious
production growth outside the red-hot Permian, where about
two-thirds of the rigs have been added over the past 10 months.
    Drillers like Hess Corp        , Chesapeake Energy Corp
       , Continental Resources Inc         and others said at
the conference they were planning to expand in North Dakota,
Oklahoma and other shale regions.             
    Oil production in North Dakota rose 38,000 barrels per day
(bpd) to 980,000 bpd in January, monthly data from the state
Industrial Commission showed this week.             
    U.S. crude inventories hit a record high last week, after
nine straight weeks of builds, while production was projected to
rise from 8.9 million bpd in 2016 to 9.2 million bpd in 2017 and
a record high of 9.6 million bpd in 2018, according to federal
energy data.                    
    Senior Saudi energy officials, however, told top independent
U.S. oil firms in a closed-door meeting this week that they
should not assume OPEC would extend output curbs to offset
rising production from U.S. shale fields, two industry sources
told Reuters.             
    Saudi Arabia's energy minister also said at CERAWeek that
there would be no "free rides" for U.S. shale producers
benefiting from the upturn.             
    

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
  
 
 

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