U.S. drillers this week added oil rigs for a seventh consecutive week, according to a closely followed report on Friday, even as analysts revise down rig count growth forecasts and energy firms become
more cautious the longer crude holds below $50 a barrel.
Drillers added 15 oil rigs in the week to Aug. 12, bringing the total rig count up to 396, compared with 672 a year ago, energy services firm
Baker Hughes Inc said. <RIG-OL-USA-BHI>
That is the longest streak of rig additions since April 2014 when U.S. oil futures averaged over $100 a barrel. Since July 1, drillers have added 66 oil rigs.
"We expect the rig count could stall or even decline due to seasonal drilling activity declines and recent commodity pull back," analysts at U.S. financial services firm Cowen & Co said in a report this week, noting U.S. land rigs increased by six this week to 485 in its rig count forecast.
U.S. crude futures gained over 2 percent to over $44 a barrel, putting the contract on track for a weekly gain over 6 percent, its biggest weekly increase since April, after it fell below $40 last week.
Prices, however, are still far from the key $50 level hit in June that analysts and drillers said would prompt a return to the well pad after nearly two years of severe cuts in the rig count amid the worst price rout in a generation.
"Consensus among exploration and production companies, service companies, and land drillers is for a 'lower-slope' recovery, with concerns of the direction of oil prices still lingering, especially with the recent dip below $40 after averaging $48 in the middle of summer," analysts at Barclays said in a report this week.
The bank said it still expects a modest increase in rig additions heading into the end of the year and through the first quarter of 2017, but revised down its total oil and natural gas rig forecast to an average of 480 from the 495 it projected in March.
The total oil and gas rig count, which bottomed at 404 in mid May at the lowest level since at least 1940, increased by 17 to 481 in the week ended Aug. 12, according to the Baker Hughes data. In 2015, the total rig count averaged 978.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)