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U.S. Oil Drillers Coming Back to Life

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Written by Sony Kassam

Click HERE to Read the Article by the Publisher.


Growing confidence that crude prices will rise in coming months is sustaining the expansion of oil drilling in the shale patch.

Rigs targeting crude rose 19 to 471 this week, the biggest increase in the last 16 months, according to Baker Hughes Inc. data reported Friday. Shale drillers have now added 155 rigs since an expansion started at the end of May. Natural gas rigs rose by 1 to 116, bringing the total for oil and gas up by 20 to 588.

Crude prices hovering near $45 should keep rig gains in check, according to Bloomberg Intelligence analysts Andrew Cosgrove and William Foiles. Oil has fallen 13 percent since peaking near $52 last month as the Organization of Petroleum Exporting Countries works with Russia to hammer out an agreement on production cuts.

“If oil prices can’t regain strength and push toward $50 a barrel, a more muted rig trajectory lies ahead, with gains limited to the Permian Basin,” the analysts wrote in a Nov. 14 report.

Oil rigs in the Permian Basin of West Texas saw the biggest jump this week, up 11 to total 229, reaching levels last seen in October 2015. D-J/Niobrara in Colorado added 2 rigs to total 18. North Dakota’s Williston Basin dropped 1 rig to end at 34.

“The Permian is the place to drill based on return on investment,” James Williams, president of WTRG Economics in London, Arkansas, said by phone. “Most parts of the Permian could probably hold up more than other basins with prices even lower than $40.”

Dakota Access

Confidence in higher oil prices and the completion of the North Dakota Access Pipeline would push the oil rig count up in other major shale plays, such as the Bakken, Williams said. The Obama administration this week delayed a decision on the controversial crude pipeline, even as President-elect Donald Trump vows to speed up reviews of such projects.

“Right now the Bakken ships oil by rail. If the pipeline is finished, that’s less expensive, and the producers would get more for their oil,” he said.

Algeria said OPEC’s informal meeting with Russia in Doha this week gave renewed confidence in a deal to curb global oil supplies. Saudi Arabia’s minister of energy and industry told Al Arabiya television Thursday he’s optimistic of an OPEC agreement and Russia’s Energy Minister Alexander Novak said his country is considering a six-month production freeze. OPEC will meet in Vienna on Nov. 30 to decide on individual country production quotas.Crude stockpiles in the U.S. rose 5.27 million barrels to 490.3 million last week, the Energy Information Administration reported Wednesday.


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Written by Sony Kassam

Click HERE to Read the Article by the Publisher.

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