U.S. energy firms this week added oil and natural gas rigs for a second week in a row as some drillers return to the wellpad now that crude prices have held gains made since recovering from coronavirus-linked lows in the spring.
The oil and gas rig count, an early indicator of future output, rose six to 261 in the week to Sep. 25, energy services firm Baker Hughes Co. said in its closely followed report.
The total rig count fell to a record low of 244 rigs during the week ended Aug. 14, according to Baker Hughes data going back to 1940.
In September, the rig count rose a second month in a row, but it fell for seventh consecutive quarter.
U.S. oil rigs rose four to 183 this week, while gas rigs rose two to 75, according to Baker Hughes data.
Even though U.S. oil prices are still down about 35% since the start of the year due to coronavirus demand destruction, U.S. crude futures have gained 112% over the past five months to around $40/bbl on Sept. 25 mostly on hopes global economies and energy demand will snap back as governments lift lockdowns.
Analysts said those higher oil prices have encouraged some energy firms to start drilling again.
It is "still too early to confidently call an official horizontal [drilling] activity trough, but our channel checks do continue to point towards more activity stabilization ahead," analysts at Tudor, Pickering, Holt & Co. said this week.
Most firms still plan to keep cutting costs.
U.S. financial services firm Cowen & Co. said the 45 independent E&P companies it tracks plan to slash spending by about 47% in 2020 versus 2019. That follows a capex reduction of roughly 9% in 2019 and an increase of around 23% in 2018.
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