U.S. energy firms added five oil rigs this week, the second week of increases in a row, despite a 19 percent collapse in U.S. crude prices from a recent high, data showed on Friday, a sign drillers were ready to return to the well pad.
The gains came after 29 consecutive weeks of declines, bringing the total rig count up to 645, the most since late May, oil services company Baker Hughes Inc said in its closely followed report.
Drillers added oil rigs in two of the four major U.S. shale oil basins – eight rigs in the Permian in West Texas and eastern New Mexico and one in the Niobrara in Colorado and Wyoming – and cut five rigs each in the other two basins – the Eagle Ford in South Texas and the Bakken in North Dakota and Montana.
U.S. crude oil futures were close to entering a bear market earlier this week when prices fell to as low as $50.58 a barrel from a recent high over $62 in early May.
Analysts said prices this week collapsed in part due to oversupply concerns with U.S. energy firms starting to drill again, a falling Chinese stock market, failing talks between Greece and its euro zone creditors, and worries over the status of negotiations between Iran and world nuclear powers.
On Friday, crude futures traded between $52 and $54 a barrel in see-saw trade as the market reacted to news of a stock exchange rally in China, new proposals by the Greek government to end the stand-off with European creditors, and as talks with Iran missed another deadline.
Those bullish market events were offset on Friday by the International Energy Agency’s bearish call that the market bottom may still be ahead for oil as the Organization of the Petroleum Exporting Countries (OPEC), the United States and others continue producing crude at near record levels despite lackluster world demand.
U.S. crude futures fell 60 percent from over $107 in June 2014 to near $42 in March due to those same oversupply worries and uninspiring demand growth.
In response to that price collapse, U.S. drillers eliminated thousands of jobs and idled 60 percent of the record high 1,609 oil rigs active in October.
Despite the cuts, U.S. crude production has averaged 9.6 million barrels per day for a seventh consecutive week, its highest level since the early 1970s, according to government data.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)
This article was from Reuters and was legally licensed through the NewsCred publisher network.