U.S. energy companies added oil rigs for a sixth week in a row as crude prices hovered near three-year highs, prompting more drillers to boost their spending plans for 2018.
Drillers added one oil rig in the week to March 2, bringing the total count to 800, the highest level since April 2015, Baker Hughes, a GE company, said in a report March 2. That was the first time since June that drillers added rigs for six consecutive weeks. They added rigs for 23 weeks in a row between January and June 2017.
The U.S. rig count, an early indicator of future output, is much higher than a year ago when 609 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 at about $61 per barrel this week, close to levels hit in late January when prices rose to their highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016.
Looking ahead, futures were trading around $60 for the balance of 2018 and $56 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 E&P companies they track, including EOG Resources Inc., have already provided capex guidance indicating an 11% increase in planned spending over 2017.
EOG boosted its 2018 capex budget to between $5.4 billion and $5.8 billion, up from between $3.7 billion and $4.1 billion in 2017.
Cowen said those E&Ps that have reported spending plans for 2018 planned to spend a total of $81.4 billion in 2018, up from an estimated $73.1 billion in 2017.
Analysts at Simmons & Co., energy specialists at U.S. investment bank Piper Jaffray, this week kept their forecast for the total oil and natural gas rig count at an average of 1,015 in 2018 and 1,128 in 2019, the same as last week.
So far this year, the total number of oil and natural gas rigs active in the United States has averaged 955. That compares with 876 rigs operating in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
U.S. crude oil production shattered a 47-year output record in November and retreated slightly in December as oil production from shale continued to upend global supply patterns, the U.S. Energy Information Administration (EIA) said in a report this week.
For the year, EIA projected in February that total U.S. production will rise to 10.6 million barrels per day (MMbbl/d) in 2018 and 11.2 MMbbl/d in 2019, up from 9.3 MMbbl/d in 2017.
The current all-time U.S. output annual peak was in 1970 at 9.6 MMbbl/d, according to federal energy data.