Investing.com — The news came as quietly as it could on a Friday afternoon and passed without any discernible impact. And understandably too: The U.S. oil rig count went up by one last week, after a drop of 127 over the past year.
But there was a significance to the story. It was the first time since June that U.S. energy firms increased the number of rigs actively drilling for oil in the country, according to a weekly update of the rig count by oil services firm Baker Hughes.
One oil rig, of course, means nothing — particularly if the count drops back the following week, and by a far greater amount.
But it could mean something if there’s a steady climb hereon.
If not anything else, a steady, albeit slow, climb will challenge the argument made day in and out by those convinced that this year’s near-20% slump in rigs will soon cause a tumble in U.S. crude production.
That argument has grown despite the U.S. Energy Information Administration, or EIA, adjusting upward its estimate on crude production to three-year highs of 12.8 million barrels per day in recent weeks, from 12.2 million at the end of July.
The EIA’s revisions came after it raised its production for U.S. crude under a new reporting methodology that took into account crude flowing from active oil wells compared with those that are drilled but uncompleted — the latter referred to as DUCs.
The revisions imply that active drilling rigs were about 10% more productive in 2021–2022 than previously estimated. Such drilling-rig productivity or efficiency would offset to some extent this year’s sheer drop in the rig count.
The EIA’s new methodology is, however, vehemently opposed by those who are long-oil, or wagering for crude prices to rise.
“The reality is that the
Read more on investing.com