Shale wildcatters pushed ahead on the biggest surge in US oil drilling since 2012 as the explorers take advantage of prices above US$50 for more than two months.
Rigs targeting crude in the US rose by six to 597 this week, the highest total since October 2015, according to Baker Hughes Inc data reported on Friday.
Drillers have added 72 rigs since this year began, the best start in five years. The expansion is spreading in Texas and Oklahoma, with the Granite Wash play leading the increase this time around.
Producers are cashing in on a more stable oil market, with prices swinging between US$50 and US$55 a barrel as OPEC and 11 other nations cut back production to help reduce global supplies.
Saudi Arabia told OPEC it reduced its oil output by the most in eight years, according to the group’s monthly report released on Monday.
“We’re seeing the rise that we anticipated to take place given the OPEC cuts,” Bloomberg Intelligence analyst Andrew Cosgrove said by telephone. “These gains are spreading to other plays and this is something we’re expecting will continue through the first half given the stability in the price of oil.”
West Texas Intermediate on Friday rose 0.2 percent to US$53.42 a barrel, but is down 0.8 percent for the week.
Global benchmark Brent crude on Friday advanced 0.1 percent to US$55.74, narrowing the week’s loss to 1.7 percent.
US oil producers have brought 281 rigs back to work since drilling bottomed out in May last year, the biggest gain since producers added 361 rigs over the nine months through June 2012.
US crude inventories rose to 518.1 million barrels last week, the highest in weekly data going back to 1982, according to the US Energy Information Administration.
Drilling is booming in a few shale plays — led by the Permian Basin in West Texas and New Mexico and the Scoop and Stack formations in Oklahoma — as they offer good returns at a US$50 oil price.
Producers, including Diamondback Energy Inc and Occidental Petroleum Corp, remain focused on the Permian, while Marathon Oil Corp intends to double down on its assets in Oklahoma.
Diamondback on Wednesday climbed to a record close after beating earnings estimates.
Marathon plans to double its number of rigs in the Scoop and Stack to 10 this year.
The Permian remains the most attractive play for investors this year, according to a Bloomberg Intelligence survey.
The Midland and Delaware basins within the Permian helped the oil field reach a new high of US$26 billion in merger and acquisition activity last year.
This week other parts of Texas and Oklahoma began to shine, with the Granite Wash Basin’s adding five rigs and the Barnett Basin adding two.
Oil market news:
‧ Occidental is working with Citigroup Inc to handle the sale of about 72,800 hectares of exploration and production assets near the Mexican border in South Texas, people familiar with the plans said.
‧ Nigeria’s Bonga oil field is to shut down for about 36 days from Thursday for maintenance.
‧ Kuwait is sticking with plans to add half a million barrels a day of oil-output capacity as it prepares for the eventual expiration of the OPEC output quotas, the head of Kuwait Oil Co said.
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