U.S. drillers this week added oil rigs for an 11th week in the past 12, according to a closely followed report on Friday, although the rate of increases has slowed as crude prices remain below the key $50 a barrel level that spurs a return to the well pad.
That is, however, the longest streak of not cutting rigs since 2011 with the rig count increasing or holding steady every week so far this quarter.
Drillers added two oil rigs in the week to Sept. 16, bringing the total rig count up to 416, the most since February but still below the 644 rigs seen a year ago, energy services firm Baker Hughes Inc said.
The oil rig count plunged from a record high of 1,609 in October 2014 to a low of 316 in May after crude prices collapsed in the biggest price rout in a generation due to a global oil glut. That decline continued through the first half of this year when drillers cut 206 rigs.
U.S. crude futures were trading at around $43 a barrel on Friday after hitting a five-week low on renewed oversupply fears. They were on track to fall 6 percent for the week on Friday.
"With a large proportion of (rig) gains from smaller operators and oil now sub $45 we would not be surprised to see a flattening or even decline over the next few weeks," analysts at U.S. financial services firm Cowen & Co said in a report this week.
Longer-term, however, analysts expect the rig count to rise slowly for the rest of 2016 before jumping higher over the next two years with a rebalancing of supply and demand.
While U.S. oil futures for the balance of 2016 are only fetching around $44 per barrel, calendars 2017 and 2018 are trading near $48 and $50, respectively.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast total oil and natural gas rigs would average 498 in 2016, 704 in 2017 and 981 in 2018.
That, however, is not much higher than the average 479 oil and gas rigs that Baker Hughes said were active since the start of the year. In 2015, the total rig count averaged 978.
Since total rigs fell to 404 in May, the lowest since at least 1940, Baker Hughes said more than two-thirds of the additions have been in the Permian basin in west Texas and eastern New Mexico, the nation's largest shale oil play
Anadarko this week said it would boost capital spending and add four rigs by the end of the year, two in the Delaware basin in the Permian and two in the DJ Basin in Colorado.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)