Rigs increase as oil nears $ 75

The number of drilling rigs operating in the United States increased this week as crude climbed nearly $ 75 a barrel.

The drillers added four rigs, bringing the country’s number to 479, according to oil services firm Baker Hughes and research firm Enverus. A year ago, 258 rigs were in service as the global pandemic crushed demand for crude and drove prices down.

Two rigs were added in Texas, the nation’s largest oil and natural gas producing state, as oil prices fell and then recovered after OPEC members failed to reach a agreement on lifting production cuts caused by a pandemic. The cartel remains deadlocked on whether to increase production as the reopening of economies stimulates demand.

Meanwhile, U.S. shale producers remain constrained even as demand for gasoline and jet fuel increases with the widespread deployment of vaccines. West Texas Intermediate, the benchmark for U.S. crude, was trading at $ 74.58 at noon on Friday, down from less than $ 48 a barrel in January.

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Producers, however, don’t take $ 75 worth of oil as a sign of drilling – at least not yet. Despite the rise in crude prices, many oil companies appear to have engaged in capital discipline, as part of a broad industry-wide effort to attract investors to the energy sector. in trouble. For months, oil executives have pledged to pay down debt and raise dividends, instead of increasing production.

As a result, the number of operating rigs in the United States recovered more slowly than expected given the sharp rise in crude prices. Drillers have added 128 rigs so far this year.

“US shale producers appear reluctant to invest and increase their own production enough to fill the supply gap, both because of the time it takes to go from a price signal to peak production, but also due to hedging constraints for public producers, ”Louise Dickson, Rystad According to Oil Markets Analyst Energy. “If the American shale industry were to react to rising prices and work on increasing its production, the increase in production would not materialize until 2022.”

U.S. crude production is about 2 million barrels per day below its peak of about 13 million barrels per day in early 2020. Texas produced nearly 4.7 million barrels per day in April, from a peak of 5.4 million barrels per day in March 2020, just before the coronavirus crossed the United States

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