Crude drilling increased in American fields even as explorers face the biggest quarterly drop in oil prices since 2014.
Working U.S. oil rigs rose by 10 this week to 883, according to data released Friday by oilfield services provider Baker Hughes. More than 100 additional rigs have been deployed across American fields this year.
It’s likely one of the last increases, said James West, an analyst at Evercore ISI, as oil prices remain at the lowest levels in more than a year. Given moves by companies including Diamondback Energy Inc. and Parsley Energy Inc. to rein in spending, “I would expect to see the rig count dip heading into the new year.”
The increase is probably indicative of a roughly three-month lag between a move in crude prices and producers’ drilling response, James Williams, president of WTRG Economics in London, Arkansas, said by telephone.
Explorers could have also been trying to squeeze in additional rigs before the end of the year, Williams said, which would allow them to claim those drilling costs on their 2018 taxes. Or, he said, “it may have been ten folks who wanted to get the drilling done so they can take off Christmas and New Year’s.”