U.S. energy companies added oil rigs for an eighth week in a row, extending a seven-month drilling recovery as crude prices remained near a 17-month high.
Drillers added 13 oil rigs in the week to Dec. 23, bringing the total count up to 523, the most since December 2015, but still below the 538 rigs seen a year ago, energy services firm Baker Hughes Inc said on Friday.
Since crude prices recovered from 13-year lows in February to around $50 a barrel in May, drillers have added a total of 207 oil rigs in 27 of the past 30 weeks, the biggest recovery in rigs since a global oil glut crushed the market over two years.
The Baker Hughes oil rig count plunged from a record 1,609 in October 2014 to a six-year low of 316 in May as U.S. crude collapsed from over $107 a barrel in June 2014 to near $26 in February 2016.
U.S. crude futures were holding around $53 a barrel on Friday ahead of the Christmas and New Year holidays as the market waited to see how the Organization of the Petroleum Exporting Countries manages its planned output cuts starting on Jan. 1. [O/R]
That put the front-month on track for its fifth week of gains in the last six, with the contract up about 22 percent since mid-November.
Analysts said they expect U.S. energy firms to boost spending on drilling and pump more oil and natural gas from shale fields in coming years now that energy prices are projected to keep climbing.
Futures for both calendar 2017 <CLCALYZ7 and 2018 were trading around $55 a barrel.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, recently forecast the total oil and natural gas rig count would average 508 in 2016, 723 in 2017 and 933 in 2018. Most wells produce both oil and gas.
Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 23 exploration and production (E&P) companies planned to increase spending by an average of 35 percent in 2017 over 2016.
That spending increase in 2017 followed an estimated 47 percent decline in 2016 and a 35 percent decline in 2015, Cowen said, according to the 65 E&P companies it tracks.
(Reporting by Scott DiSavino; Editing by Meredith Mazzilli)