13 August 2016, Houston — U.S. drillers this week added oil rigs for a seventh consecutive week, the longest recovery streak in the rig count in over two years, even as analysts revise down rig count growth forecasts and energy firms become more cautious the longer crude holds below $50 a barrel.
Drillers also added the most oil rigs since December with 15 rigs activated in the week to Aug. 12, bringing the total rig count up to 396, compared with 672 a year ago, energy services firm Baker Hughes Inc said.
That is the longest streak of rig additions since April 2014 when U.S. oil futures averaged over $100 a barrel. Since July 1, drillers have added 66 oil rigs.
U.S. crude futures were up almost 2 percent to over $44 a barrel, putting the contract on track for a weekly gain near 6 percent, its biggest weekly increase since April, after it fell below $40 last week.
Prices, however, are still far from the key $50 level hit in June that analysts and drillers said would prompt a return to the Well pad after nearly two years of severe cuts in the rig count amid the worst price rout in a generation.
“Consensus among exploration and production companies, service companies, and land drillers is for a ‘lower-slope’ recovery, with concerns of the direction of oil prices still lingering, especially with the recent dip below $40 after averaging $48 in the middle of summer,” analysts at Barclays said in a report this week.
The bank said it still expects a modest increase in rig additions heading into the end of the year and through the first quarter of 2017, but revised down its total oil and natural gas rig forecast to an average of 480 from the 495 it projected in March.
That, however, is not much higher than the average 477 oil and gas rigs that Baker Hughes said were active since the start of the year. In 2015, the total rig count averaged 978.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast total rigs would average 489 in 2016, 680 in 2017 and 957 in 2018. That is a slight reduction from last week when Simmons forecast rigs would average 491 in 2016, 683 in 2017 and 961 in 2018.
Since total rigs fell to 404 in May, the lowest since 1940, Baker Hughes said more than two-thirds of the additions have been in the Permian basin in west Texas and eastern New Mexico, the nation’s largest shale oil play.
Of the 481 total rigs active in the United States, 189 are in the Permian, the most in that basin since January.
*Scott DiSavino; Editing – Marguerita Choy – Reuters