Oil drillers added rigs in two U.S. shale basins this week, data showed on Friday, the strongest sign yet that higher crude prices are coaxing producers back to the well pad after a slump in activity of nearly six months.
Overall, U.S. drillers reduced the number of active rigs by just one this week, oil services company Baker Hughes Inc said. It was the 24th straight weekly decline, bringing the total down to 659, the lowest since August 2010.
In the latest week, drillers added three oil rigs in the Niobrara basin in Wyoming and Colorado and two in the Eagle Ford in South Texas, according to the closely followed report. That brought the total number of active rigs up to 22 in the Niobrara and 89 in the Eagle Ford.
The Eagle Ford is the nation’s second biggest shale oil field, while the Niobrara is the fourth largest.
The Permian basin in western Texas and eastern New Mexico, the biggest and fastest growing U.S. shale oil play, lost one oil rig to 232, the lowest since at least 2011, according to Baker Hughes data going back to 2011. Three other shale formations also lost one rig each this week.
The U.S. rig count will be a factor that the Organization of the Petroleum Exporting Countries looks at when it meets in Vienna on June 5. OPEC has kept production high in a bid to maintain market share. The group’s largest producer, Saudi Arabia, boosted production to a record 10.3 million barrels per day in April.
Analysts expect OPEC to maintain production levels. Goldman Sachs said a rise in U.S. oil production could send prices spiraling back down to $45 a barrel later this year.
U.S. crude prices, which were higher than $107 a barrel last June, collapsed 60 percent to a six-year low near $42 in March.
U.S. producers responded to the slide by slashing spending, eliminating thousands of jobs and idling more than half of the country’s rigs. Still, efficiency gains and completion of previously drilled wells have kept U.S. oil production steady at near 9.4 million barrels per day since early March, its highest level since the early 1970s, according to government data.
The number of U.S. oil rigs peaked at 1,609 in October. Goldman forecast the crude market will remain oversupplied through 2016 with U.S. producers set to increase drilling again and Saudi Arabia, Iraq and Russia on track to grow production sharply.
(Reporting by Scott DiSavino; Editing by David Gregorio)
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