May 12 U.S. energy firms added oil rigs for a
17th week in a row, extending a 12-month drilling recovery that
is expected to help boost crude production in the United States
to a record high next year.
Drillers added nine oil rigs in the week to May 12, bringing
the total count up to 712, the most April 2015, energy services
firm Baker Hughes Inc said on Friday. RIG-OL-USA-BHI
While that is more than double the same week a year ago when
there were only 318 active oil rigs, the pace of those additions
has declined with the total over the past four weeks falling to
the lowest since March.
U.S. crude output was expected to rise to an average of 9.3
million barrels per day (bpd) in 2017 and a record high 10.0
million bpd in 2018 from 8.9 million bpd in 2016, according to
federal energy data.
Higher output in non-OPEC countries, particularly the United
States, Canada and Brazil, which has offset the Organization of
the Petroleum Exporting Countries' (OPEC) deal reached last year
to cut production, should limit any upside to global oil prices
through the end of 2018, the U.S. government said.
U.S. crude futures , however, rebounded this week to
trade around $48 on Friday, putting the front-month contract on
track to increase for the first time in four weeks, on
expectations that OPEC will extend production cuts beyond the
end of June and on falling U.S. inventories.
OPEC and other producers meet on May 25 to decide whether to
extend cuts. Saudi Arabia, OPEC's de-facto leader, has said it
expects an extension to the end of 2017 or possibly beyond.
U.S. crude stockpiles, meanwhile, posted their biggest
one-week drawdown since December last week as imports dropped
OPEC on Thursday sharply raised its forecast for oil supply
from non-member countries in 2017 as higher prices encourage
U.S. shale drillers to pump more, hampering the producer group's
efforts to clear a glut and support prices by cutting output.
The Railroad Commission of Texas issued 909 drilling permits
in April 2017, a 33 percent increase from the same month a year
ago, the state's energy regulator said on Tuesday, more evidence
of a U.S. energy resurgence from improved oil prices.
Futures were fetching around $48 a barrel for the balance of
2017 and about $49 for calendar 2018 .
Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week forecast the total oil
and gas rig count would average 858 in 2017, 1,061 in 2018 and
1,178 in 2019. Most wells produce both oil and gas.
That compares with an average of 780 so far in 2017, 509 in
2016 and 978 in 2015. If correct, Simmons' 2019 forecast would
be the most since 2014 when there were 1,862 active rigs. The
rig count peaked in 2012 at 1,919, according to Baker Hughes
data going back to 1988.
(Reporting by Scott DiSavino; diting by Marguerita Choy)