This week, U.S. energy companies added 10 oil rigs, the largest increase seen since June. This is primarily due to crude prices reaching their highest levels in three years.
The total rig count rose to 752 in the week to Jan. 12, the most since September, according to General Electric Co’s Baker Hughes energy services firm report that was released on Friday.
The U.S. rig count, is an early indication of future output, is significantly higher than last year’s count of 522 active rigs after energy companies increased spending plans as crude began to recover from its two-year price drop.
The increase in U.S. drilling persisted 14 months before momentarily halting during the second half of 2017, as some producers decreased their 2017 spending plans after prices declined over the summer.
“Drilling activity may not be up every week, but we continue to expect growth through the first quarter of 2018 and longer if prices hold,” said James Williams, president of an oil and gas consulting agency.
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This week U.S. crude futures traded around $64 a barrel, near its highest level since December of 2014, which you can compared to the averages of $50.85 in 2017 and $43.47 in 2016. For this year, futures were trading around $62 for most of 2018.
In anticipation of higher prices in 2018 than 2017, a U.S. financial services firm stated that 23 of the roughly 65 E&Ps that are tracked have already provided capital expenditure guidance for 2018 signifying a 12 percent increase in planned spending throughout 2017.
The firm added that the E&Ps it tracks stated that they would exhaust roughly $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, about 53 percent higher than what was planned for the year prior.
Analysts and energy specialists reduced their forecasts this week for the total oil and natural gas rig count to an average of 996 in 2018 and 1,126 in 2019. Last week, it forecast 997 in 2018 and 1,126 in 2019. On January 12, there were 939 active oil and natural gas rigs. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015.
U.S. production is anticipated to reach an all-time high of 10.3 million barrels per day this year and 10.9 million bpd in 2019, up from 9.3 million bpd in 2017. U.S. output hit its highest annual point at 9.6 million bpd in 1970, according to federal energy data.