U.S. energy firms this week increased the number of oil rigs operating for a second week in a row with oil futures up about 12% over the past couple of weeks despite plans by most producers to cut spending on new drilling this year.
The rig count, however, was still down 92, or 10%, since the start of the year.
Companies added four oil rigs in the week to June 28, bringing the total count to 793, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
That compares with 858 rigs operating during the same week a year ago.
For the month, drillers cut seven rigs, their seventh consecutive cut. That is the most monthly declines in a row since May 2016 when the rig count fell for a record nine months.
For the quarter, drillers cut 23 active rigs after cutting 69 rigs in the first quarter.
The rig count, an early indicator of future output, declined as independent exploration and production companies cut spending on new drilling as they focus more on earnings growth instead of increased output.
U.S. crude oil output in April rose to a fresh monthly record, surpassing 12 million barrels per day, the U.S. Energy Information Administration (EIA) said in a monthly report on Friday.
For the year, EIA projects total U.S. output will rise to 12.32 million bpd in 2019, up from the annual record of 10.96 million bpd set in 2018.
U.S. crude futures traded around $59 per barrel on Friday, putting the contract up about 3% for the week after gaining 9% last week ahead of trade talks between the U.S. and Chinese presidents this weekend and expected production cuts from the Organization of the Petroleum Exporting Countries (OPEC) on Monday.
Looking ahead, crude futures were trading around $59 a barrel for the balance of 2019 and $57 in calendar 2020 .
U.S. financial services firm Cowen & Co this week said that projections from the exploration and production (E&P) companies it tracks point to a 5% decline in capital expenditures for drilling and completions in 2019 versus 2018.
Cowen said independent producers expect to spend about 11% less in 2019, while major oil companies plan to spend about 16% more.
In total, Cowen said all of the E&P companies it tracks that have reported will spend about $81.1 billion in 2019 versus $85.4 billion in 2018.
Year-to-date, the total number of oil and gas rigs active in the United States has averaged 1,016. Most rigs produce both oil and gas.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast the average combined oil and gas rig count will slide from a four-year high of 1,032 in 2018 to 992 in 2019 before rising to 1,011 in 2020 and 1,067 in 2022.
That is the same as Simmons forecast last week.
(Reporting by Scott DiSavino Editing by Marguerita Choy and Susan Thomas)