The recent recovery of oil prices has U.S. drillers returning to the wellpad, as this is the third straight week in a row that U.S. energy firms added oil and gas rigs – indicating that things are definitely looking up for the country’s oil, gas, and energy industry.
Known to be an early sign of what the expected output will be, the oil and gas rig count hit 503 during the week of August 20th. According to industry experts, this is the highest U.S. oil and gas rig count since April 2020. This recent addition of rigs brings the new count to almost double what it was last year at this time. The count in August 2020 was 254 total rigs.
Last week, U.S. crude CLc1 futures traded at around $63 a barrel. This makes the seventh session in a row that decreased, with numbers heading towards the record setting three-month lows that have been seen since the onset of the new Delta variant of COVID-19. The virus has taken a tremendous toll on the energy industry and is wreaking more havoc by causing closings, restrictions on travel, and other factors that affect the oil and gas industry as a whole.
Overall, though, energy firms are on board with raising their spending, indicating that oil prices are up about 29% thus far in 2021. Though additional spending is occurring with more expected, it appears the limits are very low. Most energy companies are still focusing on increasing cash flow, seeing a huge reduction of their debt, and increasing returns for their shareholders. Many industry experts and analysts do not expect the increased budgets to increase output, though, and indicate that it will simply replace the natural declines currently occurring in well production.
According to the Energy Information Administration’s latest report of monthly drilling productivity, the U.S. shale oil output is predicted to rise to 8.1 million barrels per day next month, meaning September will be the highest output since April 2020.
This being said, government projections predict the total oil production to decrease to 11.1 million barrels per day this year, dropping from 11.3 million barrels per day seen in 2020. Production is then expected to increase to 11.8 million barrels per day in 2022. The record for year for oil production in the U.S. was in 2019, which when we saw an annual high of 12.3 million barrels per day.
