U.S. energy firms this week added one oil rig after 12 weeks of cuts, data showed on Friday, after oil futures have soared over 50 percent since falling to a 12-year low in mid February.
The total oil rig count rose to 387 in the week to March 18, compared with 825 oil rigs operating in the same week a year ago, oil services company Baker Hughes Inc said in its closely followed report.
In 2015, drillers cut on average 18 oil rigs per week for a total of 963 for the year, the biggest annual decline since at least 1988.
Before this week, drillers cut on average 15 oil rigs per week so far this year.
The additions this week showed that at least some producers were willing to start drilling again in hopes oil prices will continue to rise in the future.
Energy firms have sharply reduced oil and gas drilling since the selloff in global crude markets began in mid-2014.
Despite the one rig gain on the oil side, total oil and natural gas rigs this week declined by four to 476, the lowest level since at least 1940, according to Baker Hughes. Gas rigs this week fell by five to 89, their lowest level since at least 1987.
Still, many analysts think the combined rig count will rebound later this year with signs that prices have bottomed after U.S. crude futures hit a 12-year low of $26.05 a barrel in February and U.S. gas futures fell to a near 18-year low of $1.611 per million British thermal units earlier in March.
Since hitting those lows, U.S. oil futures have soared over 50 percent to around $40 a barrel, while U.S. gas gained about 20 percent to around $1.917 per mmBtu.
“We expect an upward sloping futures curve to drive some recovery in activity, stabilizing U.S. oil production levels in the mid 8 (million barrels per day) range,” analysts at Cowen & Co, a financial services firm, said in a note this week.
U.S. crude futures for the balance of 2016 were fetching around $43 a barrel.
“Producers may begin to hedge at that price level, in some cases to appease reserve lenders, supporting our view of increased rig activity toward the end of 2016 and throughout 2017,” Cowen said.
After lowering its estimates due to reduced exploration and production company spending, Cowen forecast combined oil and gas land rigs would bottom in the 375 to 400 range before edging up to 401 at the end of 2016 and 739 at the end of 2017. There were 450 active U.S. land rigs on March 11, according to Baker Hughes.
U.S. crude production was expected to fall from 9.4 million barrels per day in 2015 to 8.7 million bpd in 2016 and 8.2 million bpd in 2017, according to the latest federal estimates.