Drillers put rigs in U.S. oil fields back to work for a second straight week, suggesting the end of an unprecedented retreat from the country’s prolific shale formations.
Rigs targeting oil in the U.S. increased by five to 645, Baker Hughes Inc. said on its website Friday. They rose by 12 last week. Natural gas rigs fell by two to 217 and miscellaneous rigs dropped by two to one, bringing the total count up one to 863.
The biggest regional growth came in the Permian Basin of West Texas, where eight oil rigs were added to 239. The Eagle Ford shale in South Texas saw a drop of five rigs to 81.
“There are operators in the Permian Basin who are identifying properties that are economic even at these prices,” Matt Marietta, an analyst at Stephens Inc. in Houston, said in a phone interview. “We’ll continue to get this churn in the rig count where some lower-quality rigs are dropped out of the market, and higher-quality rigs are picked up.”
More than half the country’s oil rigs have been sidelined as prices slipped to near $50 a barrel from more than $100 a year ago. Even with the collapse in drilling, U.S. crude output rose 9,000 barrels a day to 9.6 million in the seven days ended July 3, just shy of the 9.61 million record set on June 5, Energy Information Administration data show.
U.S. benchmark West Texas Intermediate oil for August delivery declined by 4 cents to $52.74 a barrel on the New York Mercantile Exchange, down more than half from the 52-week high of $105.25 reached last July.
U.S. oil rigs are close to a bottom, “though they probably won’t rise materially anytime soon,” Bloomberg Intelligence analysts Andrew Cosgrove and William Foiles said in a research note July 6. “A big pickup in new drilling would need sustained higher commodity prices.”
Oil explorers are retreating from U.S. fields as the Organization of Petroleum Exporting Countries, which accounts for more than a third of the world’s oil, resists calls to curb its own supply. The 12-nation group will boost exports 0.8 percent in the four weeks to July 25, tanker tracker Oil Movements said in a report Thursday.