US Drillers Add Oil Rigs as WTI Jumps 14%

US Drilling Activity Shows Signs of Life

According to Baker Hughes' latest report, the number of active oil and gas drilling rigs in the United States saw a marginal increase this week. The total rig count reached 551, a figure still 41 units below the level observed during the same period last year. This data point offers a glimpse into the current state of the U.S. energy sector, which is navigating a complex landscape of fluctuating prices and geopolitical tensions.

Specifically, the number of active oil rigs climbed by 4 to a total of 411. However, this figure remains significantly lower, trailing 75 rigs behind the count from this time last year. Conversely, the number of gas rigs experienced a slight retraction, decreasing by 2 to settle at 132. This gas rig count is still 31 higher than the count from the previous year. The count of miscellaneous rigs remained unchanged at 8.

Production and Completion Trends

Recent data from the Energy Information Administration (EIA) indicates a dip in weekly U.S. crude oil production. Output decreased by 6,000 bpd during the week ending February 27, averaging 13.696 million bpd. This level is approximately 166,000 bpd shy of the all-time high. Market analysts are closely monitoring these production figures for insights into supply dynamics.

Furthermore, Primary Vision's Frac Spread Count, an indicator of well completion activity, registered an increase of 7 for the week ending February 27, mirroring the previous week's gain. This suggests an uptick in the pace of bringing new wells online.

Regional Activity and Price Volatility

Drilling activity in the Permian Basin, a key U.S. oil-producing region, saw a rise of 1 rig, bringing the total to 241. This figure is still 63 rigs below year-ago levels. The Eagle Ford region also experienced growth, with an increase of 3 rigs to a total of 43, which is 6 fewer than the same period last year.

Oil prices have exhibited substantial volatility, influenced by geopolitical factors such as disruptions in the Strait of Hormuz and production curtailments in Iraq and Kuwait. Brent crude futures reached $94.10 per barrel (+10.17%), marking a $20 increase week over week. West Texas Intermediate (WTI) crude traded at $92.22 per barrel, up $11.21 on the day and more than $23 per barrel compared to the previous week.

It's important to note that U.S. drilling activity typically responds to price surges with a time lag. Producers often wait for sustained higher prices before committing to new capital investments.