(Reuters) – U.S. energy companies added oil rigs for a second week in a row as crude prices hover near three year highs, prompting drillers to boost spending plans for this year.
Drillers added four oil rigs in the week to March 23, bringing the total count to 804, the highest level since March 2015, 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 652 rigs were active as energy companies have continued to boost spending since mid-2016 when crude prices began recovering from a two-year crash.
U.S. crude futures traded around $65 a barrel this week, approaching the three-year high of $66.66 hit in late January. That was still much higher than the $50.85 average hit 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 58 of the roughly 65 exploration and production (E&P) companies they track have already provided capital expenditure guidance indicating an 11 percent increase in planned spending over 2017.
Cowen said those E&Ps that have reported capital plans for 2018 expected to spend a total of $80.5 billion in 2018, up from an estimated $72.4 billion in 2017.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the total oil and natural gas rig count would average 1,015 in 2018 and 1,128 in 2019, the same as its projection last week.
So far this year, the total number of oil and natural gas rigs active in the United States has averaged 964. That compares with an average of 876 rigs operating in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
For the year, EIA projected in March that total U.S. production will rise to a record high 10.7 million bpd in 2018 and 11.3 million bpd in 2019, up from 9.3 million bpd in 2017.
The current all-time U.S. annual output peak was in 1970 at 9.6 million bpd, according to federal energy data.