The oil and gas rig count, an early indicator of future output, rose 13 to 601 in the week to Jan. 14, its highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday. , ,
The total count was up 228, or 61%, over this time last year.
U.S. oil rigs rose 11 to 492 this week, their highest since April 2020, while gas rigs rose two to 109, their highest since March 2020.
U.S. crude futures were trading around $84 per barrel on Friday, putting the contract on track to rise for a fourth week in a row for the first time since October.
With oil prices up about 12% so far this year after soaring 55% in 2021, a growing number of exploration and production (E&P) firms plan to raise spending for a second consecutive year in 2022.
The rig count has climbed gradually for a record 17 months in a row, but U.S. oil production slipped in 2021 as many energy firms focused more on returning money to investors rather than boosting output.
U.S. oil output was hit by the coronavirus pandemic which crushed demand and prices, and is only forecast to surpass 2019’s record levels of 12.3 million barrels per day (bpd) next year. The government projects production will rise from 11.2 million bpd in 2021 to 11.8 million bpd in 2022 and 12.4 million bpd in 2023.
Rig activity across the five largest U.S. oil plays would need to increase by about 13 weekly over next eight weeks to reach a sustainable plateau to hold current oil volumes in 2022, versus average rig gains of about two over the last four weeks, Mizuho said this week.
“We continue to believe drilling activity will be a put a ceiling on U.S. supply growth, which is positive for the commodity and large-cap E&Ps,” the bank said.