Aug 21 (Reuters) – U.S. energy firms added oil and natural gas rigs for the first time since March as some shale producers reverse production cuts with oil prices recovering from historic lows caused by a slump in fuel demand amid coronavirus lockdowns.
The oil and gas rig count, an early indicator of future output, rose 10 from a record low to 254 in the week to Aug. 21, energy services firm Baker Hughes Co said in its closely followed report on Friday. RIG-USA-BHI RIG-OL-USA-BHI RIG-GS-USA-BHI
Prior to this week, the rig count hit records lows for 15 weeks.
The weekly increase in oil and gas rigs was the biggest gain since January.
U.S. oil rigs rose 11 to 183 this week, also their biggest rise since January. Gas rigs fell by one to 69, just one short of its record low.
Even though U.S. crude prices have jumped over 120% from April record lows spurred by coronavirus demand destruction, they are still down about 32% since the start of the year and have been largely rangebound since mid-June at between $37 and $43 a barrel.
On Friday, it was trading around $42 a barrel on hopes global economies and energy demand will snap back as governments lift lockdowns.
Analysts said higher oil prices will encourage energy firms to slow rig count reductions and start adding units later this year.
U.S. financial services firm Cowen & Co said the 45 independent exploration and production (E&P) companies it tracks plan to slash spending by about 47% in 2020 versus 2019. That follows a capex reduction of roughly 9% in 2019 and an increase of around 23% in 2018.
Cowen also said that some E&Ps issued early estimates for 2021 that so far point to 8% drop in spending next year versus 2020. (Reporting by Scott DiSavino Editing by Marguerita Choy)