U.S. energy firms added one oil rig this week, the sixth consecutive week of increases even as U.S. oil prices flirted with 6-1/2-year lows, signaling further pressure on a market awash with crude.
Reflecting plans announced in May and June, when U.S. crude futures averaged $60 a barrel, drillers added one oil rig in the week ending on Aug. 28, bringing the total count up to 675, the highest since early May, oil services company Baker Hughes Inc said on Friday in its closely followed report. “It’s getting real close to the end of the increases, given the drop in oil,” Phil Flynn, an analyst with the Price Futures Group, said. “I would not bet that the increases will last.”
After slashing their rigs by up to 60 percent in the first half of this year, some companies decided to begin drilling more in the second quarter as oil prices stabilized at around $60 a barrel. U.S. oil prices were headed for their first positive week since mid-June, rallying from multi-year lows of below $40 hit earlier in the week.
U.S. crude oil futures have fallen by as much as 21 percent in the past month and were down this week by as much as 37 percent from their six-month high of $61.43 in early June. U.S. crude futures fell from over $107 in June 2014 to near $42 in March due to oversupply worries and uninspiring demand growth.
In response to that 60 percent price collapse, U.S. drillers eliminated thousands of jobs and idled 60 percent of the record high 1,609 oil rigs that were active in October.