U.S. Baker Hughes Oil Rig Count Rise

By Arthur Greene December 9, 2016
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The US oil rig count jumped this week by 21 to 498, the biggest increase since July 2015 according to driller Baker Hughes.

The increase is the sixth weekly increase in a row, with only one weekly decline taking place over the past six months. This is the largest weekly jump since it also rose by 21 the week of July 24, 2015. The number of gas-only rigs rose by 6 to 125. Year-on-year the US rig count was down 85 from last year’s 709, with oil rigs down 26, gas rigs down 60, and miscellaneous rigs up one.

Similar to last week’s Baker Hughes report, the biggest gainer by basin was the coveted Permian, which now boasts 246 oil and gas rigs—up 11 rigs from last week, and 42 more than the same period last year.

The U.S. crude futures were trading around $51 a barrel on Friday on optimism that non-OPEC producers meeting in Vienna over the weekend would agree to cut output to bolster the cartel's own agreement to limit production.

With prices expected to keep rising in coming months, 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.

If US shale-oil production continues to ramp up, it could hamper OPEC's efforts to reduce the worldwide glut of oil. Meanwhile, there are doubts about whether OPEC members will stick to their agreement.

The steadily increasing number of active oil rigs in the U.S. at a time when OPEC had failed to agree on a production cut at the Doha meeting may be a sign that oil and gas players in the U.S. are not waiting for OPEC to correct the market, and that they are behaving independently of the once-revered cartel.

Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 20 exploration and production (E&P) companies, including PDC Energy Inc, planned to increase spending by an average of 34 percent in 2017 over 2016.

That projected 2017 spending increase followed an estimated 48 percent decline in 2016 and a 35 percent decline in 2015, Cowen said according to the 64 E&P companies it tracks.

On Friday, oil prices firmed ahead of a weekend meeting of major oil-producing countries, rising 1.12% to $51.41 a barrel in recent trading on Friday.
By Arthur Greene December 9, 2016

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