U.S. energy companies added oil rigs for a second week in a row as crude prices hover near three year highs. This has lead oil drillers to boost spending plans for the rest of this year. Drillers added four oil rigs in the week of March 23, bringing the total count to 804, the highest level since March 2015, General Electric Co’s Baker Hughes energy services firm has reported. The U.S. rig count, an early indicator of future output, is much higher than a year ago when 652 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 around $65 a barrel this past week, approaching the three-year high of $66.66 that was hit in late January. That was still much higher than the $50.85 average hit in 2017 and $43.47 in 2016. In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co said 58 of the roughly 65 exploration and production (E&P) companies they track have already provided capital expenditure guidance indicating an 11 percent increase in planned spending over 2017. Cowen said those E&Ps that have reported capital plans for 2018 expected to spend a total of $80.5 billion in 2018, up from an estimated $72.4 billion in 2017.
So far this year, the total number of oil and natural gas rigs active in the United States has averaged 964. That compares with an average of 876 rigs operating in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.