For the sixth week in a row, U.S. Energy companies added oil and natural gas rigs as oil prices rose to their highest level since 2014, pushing drillers to return to the well pad. According to Baker Hughes Co., an Energy services provider, the oil and gas rig count, a leading indicator of future output, increased by 10 to 543 in the week ending Oct. 15, the highest level since April 2020. The total rig count is now up 261 rigs, or 93%, from this time last year.
This week, oil rigs in the United States increased by 12 to 445, the highest level since April 2020, while gas rigs declined by 1 to 98, the lowest level since August. The weekly increase in oil rigs was the most since April 2021. In addition, crude futures in the United States surged to their highest level since 2014 this week, trading above $82 a barrel on Friday, on expectations of a supply shortage in the coming months as rising gas and coal prices stoke a shift to oil-based products.
With oil prices up about 70% this year, some Energy companies have stated that they want to increase spending in 2021 after decreasing drilling and finishing costs in 2019 and 2020. However, the rise in expenditure will be modest because most companies are still focused on improving cash flow, decreasing debt, and raising shareholder returns rather than growing output.
However, it will take time for the increased rig count to transfer into increased oil production. According to government forecasts, oil output in the United States will decline from 11.3 million barrels per day (BPD) in 2020 to 11.0 million BPD in 2021 before rebounding to 11.7 million BPD in 2022. In 2019, the annual high was 12.3 million BPD, which was a record.