U.S. drillers added oil rigs for a 12th week in a row, extending the recovery into an 11th month as energy companies increased spending on new production to take advantage of a recovery in crude prices.
Drillers added 10 oil rigs in the week to April 7, bringing the total count up to 672, the most since August 2015, energy services firm Baker Hughes Inc. (NYSE: BHI) said on April 7. During the same week a year ago, there were 354 active oil rigs.
More than half of the rigs added since the recovery started in June after crude prices first topped $50 a barrel, were in the Permian Basin, the nation’s biggest shale oil formation located in west Texas and eastern New Mexico. Drillers this week added 12 rigs there, bringing the total up to 331, the highest since February 2015.
Chevron Corp. CEO John Watson said this week the company was set to boost development of its vast Permian Basin holdings.
U.S. crude futures traded at a one-month high just below $53 a barrel on April 7 after the U.S. fired missiles at a Syrian government airbase, putting the contract on track to rise for a second week in a row.
My View: This is another sign which suggest that the moment we see improvement in crude oil prices, the U.S. drillers would immediately react. As I said before, with continuous technological improvement that makes cost of production lower, I would think that oversupply is here to stay.