U.S. drillers this week added oil rigs for an eighth consecutive week, the longest recovery streak in the rig count in over two years, as crude prices rebounded toward the key $50-a-barrel mark that makes the return to the well pad viable.
Drillers added 10 oil rigs in week to Aug. 19, bringing the total rig count to 406, compared with 674 a year ago, energy services firm Baker Hughes Inc said on Friday. <RIG-OL-USA-BHI>.
The oil rig count has risen by 76 since the week ended July 1, the most weekly additions in a row since April 2014, after U.S. crude prices touched $50.
Energy companies kept adding rigs despite prices dipping below $40 earlier this month but analysts have revised down rig count growth forecasts.
Crude futures, however, have surged nearly $10 a barrel, or more than 20 percent, in just over two weeks on speculation that Saudi Arabia and other key members of the Organization of the Petroleum Exporting Countries will agree next month to a production freeze deal with non-OPEC members led by Russia.
On Friday, U.S. crude hovered at $48 a barrel, versus its 2016 peak of $51.67.
The two-month long hike in the rig count has reinforced worries of some analysts that higher oil prices could
spur more output and undercut efforts to balance supply-demand in a glutted market.
"The U.S. production factor has taken on a more bearish appearance as the oil rig counts have increased appreciably and weekly EIA (Energy Information Administration) production estimates have shown a surprising uptick," said Jim Ritterbusch of Chicago-based oil markets consultancy Ritterbusch & Associates.
"We are maintaining a theme that the magnitude of the rig increases that have been primarily developing within the Permian will prove sufficient to force leveling into lower-48 output, with U.S. crude production likely to post an increase from next month into October."
(Reporting by Barani Krishnan; Editing by Marguerita Choy)