U.S. drillers this week added oil rigs for a fifth consecutive week, Baker Hughes Inc said on Friday, but the oilfield services provider and some analysts cast doubts on a substantial recovery in drilling this year with crude prices heading for their biggest monthly loss in a year.
Drillers added three oil rigs in the week to July 29, bringing the total rig count up to 374, compared with 664 a year ago, according to the closely followed Baker Hughes weekly report. <RIG-OL-USA-BHI>
U.S. crude futures have slipped below $41 a barrel for the first time since April, pressured by persistently high inventories.
The market was on track for a monthly loss of about 15 percent, and is down about 20 percent from highs over $50 in early June when drillers started returning to the well pad.
"I believe oil prices in the upper $50s at a minimum are required for a sustainable recovery in North America," Baker Hughes Chief Executive Martin Craighead said on a conference call on Thursday.
Bigger rivals Schlumberger Ltd a
nd Halliburton Co last week both said they expected a modest recovery in North American activity.
"I don't subscribe to the hopeful commentary," Craighead said.
Analysts and producers said $50 a barrel was the key level that would prompt a return to the well pad after the biggest price rout in a generation prompted a slump in the oil rig count since it peaked at 1,609 in October 2014.
Since early June when U.S. crude prices tipped above $50, drillers have added 55 oil rigs before this week.
A similar price rally last year to over $60 in May-June spurred drillers to add 47 rigs in July to August.
But that return to the well pad was shortlived as prices fell to 12-year lows near $26 by February, resulting in the rig count tumbling by 359 between September 2015 and May 2016.
"If oil prices continue to fall, rigs will turn down with the price," James Williams, President of WTRG Economics in Arkansas said in a report written this week when crude was trading at $43.
He said $43 was "close to the point" the rig count could turn down, but noted there would likely be a one- to two- month lag before the count actually declines because it takes time to acquire needed permits, rigs and crews.
"We anticipate slow rig growth. However, that is with all of the caveats about oil prices, which must stay at or above the current level," Williams said.
Over the long-term, analysts still expect drilling to pick up with futures for calendar 2017 trading above $46 and 2018 near $49.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast the total oil and natural rig count would average 492 in 2016, 686 in 2017 and 964 in 2018.
The total oil and gas rig count bottomed at 404 in mid May, the lowest level since at least 1940, and increased by one to 463 in the week ended July 29, according to Baker Hughes data. In 2015, the total rig count averaged 978.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)