US Oil Drillers Add Rigs For Sixth Week In A Row

Reuters

Aug 5 (Reuters) - U.S. drillers this week added oil rigs for a sixth consecutive week, according to a closely followed report on Friday, despite crude prices falling to April lows below $40 a barrel this week.

Some producers are still boosting spending on expectations for higher prices in the future.

Drillers added seven oil rigs in the week to Aug. 5, bringing the total rig count up to 381, compared with 670 a year ago, energy services firm Baker Hughes Inc said.

They have added a total of 51 rigs since the week to July 1, the longest streak of weekly additions since July-August 2015, when 37 rigs were added over six weeks.

Energy firms continued to add most rigs in the Permian shale in west Texas and eastern New Mexico. They activated five rigs there this week, bringing the total to 177, the most since February and 34 percent over recent lows in April.

After rising by 44 oil rigs in July, the most in a month since April 2014, analysts forecast the rig count would be choppy over the next few months due to seasonal drilling declines and a near 20 percent drop in crude prices on oversupply concerns since topping $50 a barrel in early June.

"We expect weekly changes in the rig count will be choppy in coming months and could stall or even decline as seasonal drilling activity declines," analysts at U.S. financial services firm Cowen & Co said in a note this week.

U.S. crude futures were down about 1 percent on Friday at above $41 a barrel after the dollar surged on robust U.S. jobs data.

Earlier in the week, U.S. crude dropped below $40, pushing it further away from the $50 level hit in June that analysts and producers said would prompt their return to the well pad.

Recent price declines over the past several weeks, however have not stopped companies from planning to add more rigs over the next several months in to next year.

Cowen noted several companies, including Apache Corp , Chesapeake Energy Corp, Cimarex Energy Co and Marathon Oil Corp, announced plans in the past week to add rigs.

Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast total oil and natural rig count would average 491 in 2016, 683 in 2017 and 961 in 2018.

The total oil and gas rig count bottomed at 404 in mid May, the lowest level since at least 1940, and increased by one to 464 in the week ended Aug. 5, according to the Baker Hughes data. In 2015, the total rig count averaged 978.

(Reporting by Scott DiSavino; Editing by Marguerita Choy)

Copyright 2016 Thomson Reuters. Click for Restrictions.

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