According to Baker Hughes, energy firms across America have added rigs intended for drilling. This marks the second time rigs have been added since the start of 2016. The statement from Baker Hughes was made on Friday and followed crude’s seven-month high of more than $50 per barrel over the last two weeks.
Producers and analysts have specified this price level as crucial to activating a return to the well pad. Baker Hughes reported drillers adding 9 rigs the week of June 3. This addition brings the total rig count up to 325 in comparison to the 642 on count just a year ago.
Before this week, only one rig had been installed so far this year. That rig was installed the week of March 18. On average, energy companies had cut 10 oil rigs a week, totaling about 220 this year alone. In 2015, an average of 18 rigs were cut each week or 963 rigs total. These cuts were the most on record since 1988 in the midst of a major collapse in crude prices. The rig count has fallen since hitting its peak count of 1,609 rigs in October 2014. The peak occurred as US crude futures dropped over $107 per barrel in the middle of 2014, but then fell to a nearly 13-year low of $26 back in February.
US oil futures have increased about 90 percent since then, smashing the $50 mark made earlier in the week. However, oil prices were aimed to assume a 1 percent loss this week. This prediction was made over early signs that the market was moving to a more stable supply and demand after a chain of disruptions in the supply. This stopped three successive weeks of price gains.
Crude futures are accumulating almost $50 for the 2016 balance and more than $51 for 2017. US oil analysts and execs have reported that any price increase over $50 could incite a revival in new drilling projects.
Claims made by analysts at Raymond James this week said that rig count is either at or near the bottom. A small recovery for the back half of 2016 is also estimated to be in the cards. Raymond James, an American financial services firm, actually cut its projected 2016 exit number from 700 to 625. They claimed the efforts of energy firms to finish drilled, but uncompleted wells (known as DUCs) would hinder the rig count from growing much higher this year. Credit Suisse analysts predict the American rig count to average about 470 this year, 600 in 2017, and 718 in 2018.
Article written by HEI contributor Briana Steptoe.