U.S. energy companies added 12 oil rigs this week, the biggest weekly increase since March, as crude prices hovered near their highest levels since 2014, prompting drillers to return to the well pad.
Drillers boosted the rig count to 759 in the week to Jan. 26, the highest level since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
The U.S. rig count, an early indicator of future output, is much higher than a year ago when only 566 rigs were active after energy companies started to boost spending in mid 2016 as crude started recovering from a two-year price crash.
U.S. crude futures were trading around $66 a barrel, after hitting $66.66 on Thursday, the highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016.
Looking ahead, futures were trading around $64 for the balance of 2018 and $59 for calendar 2019 .
In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co said 26 of the roughly 65 E&Ps they track, including EP Energy Corp , have already provided capital expenditure guidance for 2018 indicating an 7 percent increase in planned spending over 2017.
EP Energy said it would boost capital spending to $600-$650 million in 2018, up about 9 percent from the $550-$600 million it planned to spend in 2017.
Cowen said the E&Ps it tracks planned to spend about $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, about 53 percent over what they planned to spend in 2016.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, last week forecast the total oil and natural gas rig count would average of 1,004 in 2018 and 1,128 in 2019.
There were 947 oil and natural gas rigs active on Jan. 26. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.