Energy Rigs in U.S. Advance by 6 to 1,776, Baker Hughes Reports

Oil and gas rigs in the U.S. increased by six to 1,776 this week, according to Baker Hughes Inc. (BHI) The advance was the fourth in a row.

Oil rigs rose six to 1,401, the Houston-based field services company said on its website. Gas rigs were unchanged at 369. The total U.S. count reached the highest level since March 15. Rising output from U.S. shale formations have boosted domestic oil production to a 22-year high.

“We are increasingly confident that the U.S. land recovery is poised to accelerate in the second half of the year,” James C. West, oil services and drilling analyst for Barclays Plc (BARC)’s investment-banking unit in New York, said in a research note July 23. “Demand for well services has been stealthily increasing in recent months.”

Natural gas for August delivery fell 7 cents, or 1.9 percent, to $3.574 per million British thermal units at 1:08 p.m. on the New York Mercantile Exchange, up 15 percent from a year ago.

U.S. gas stockpiles gained 41 billion cubic feet last week to 2.786 trillion, smaller than the five-year seasonal average increase of 53 billion, the Energy Information Administration said yesterday. Supplies were 12.5 percent below year-earlier levels.

U.S. oil output climbed to 7.56 million barrels last week, the most since December 1990, according to the EIA, the Energy Department’s statistical unit. Stockpiles slipped to 364.2 million barrels.

Crude for September delivery dropped $1.05, or 1 percent, to $104.44 today on the Nymex, up 17 percent in the past year.

Oil prices are “well above levels” at which exploration and production companies would consider significantly raising their capital spending in the second half of this year, West said.

“We think recent positive data regarding U.S. land activity is a clear signal to the market that operators are putting capital to work and a sustained uptick in activity is under way,” he said.

To contact the reporter on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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