U.S. energy firms this week added oil and natural gas rigs for a third time in four weeks as relatively high oil prices encourage firms to drill more.
The oil and gas rig count, an early indicator of future output, rose two to 770 in the week to Nov. 4, energy services firm Baker Hughes Co. said in its closely followed report on Nov. 4.
Baker Hughes said that puts the total rig count up 220 rigs, or 40%, over this time last year.
U.S. oil rigs rose three to 613 this week, their highest since March 2020, while gas rigs fell one to 155, their lowest since late July 2022.
Even though the rig count mostly increased over the past two years, weekly increases have been in the single digits in recent months and oil production remains below record levels seen before the pandemic as many companies focus more on returning money to investors and paying down debt rather than boosting output.
U.S. crude production was on track to rise from 11.3 MMbbl/d in 2021 to 11.8 MMbbl/d in 2022 and 12.4 MMbbl/d in 2023, according to federal energy data. That compares with a record 12.3 MMbbl/d in 2019.
But with oil prices still up about 22% so far this year after soaring 55% in 2021 - and pressure from the government to produce more - several energy firms have said they plan to boost spending for a second year in a row in 2022 after cutting drilling and completion expenditures in 2019 and 2020.
U.S. financial services firm Cowen & Co. said the independent E&P companies it tracks plan to boost spending by about 38% in 2022 versus 2021 (up from 35% last week) after increasing spending about 4% in 2021 versus 2020.
Some analysts, however, have noted that even when energy firms do boost their capital expenditures, it was not necessarily to increase production but was instead being spent on more expensive pipes and other equipment and rising labor costs due to soaring inflation and supply disruptions.