The United States’ oil and gas rig count rose for the sixth week in a row according to data released last Wednesday by Baker Hughes Co, a Houston-based oilfield services company.
The count increased by three, from 348 the previous week. Despite the rise, the rig count pales in comparison to last year, dropping by 445 year-on-year.
Conversely, Canada’s rig count decreased by 23 last week, though it also witnessed a year-on-year dip by 26 oil rigs. Internationally, the count increased by 13 to 669, down -427 compared to last year.
The rig count is an early indicator of future output and the latest data shows that oil and gas producers are returning to the well pad as energy demand and prices recover.
The U.S. benchmark West Texas Intermediate (WTI) closed Friday at $48.52, rising 0.5% from the previous week while Brent crude rose 1% to $51.80.
The rise in prices is linked to a number of factors including the approval of a second vaccine in the United Kingdom and a decline in U.S. inventories – Frac Spread Count fell to 136 from 146 the previous week.
Analysts are however not all that optimistic about the oil and gas industry’s prospects in 2021. A Reuters poll of 39 economists and analysts expects oil trading to average $50.67 a barrel this year. Though it is an improvement from the November poll which put the forecast at $49.35, it is still lower than the $51.13 at which Brent Crude traded at the end of 2020.
The bleak outlook is down to the dangers of a global spread of the new strain of the virus and the uncertainty over the capacity of the Organisation of Petroleum Exporting Countries (OPEC) to manage the coming crisis.
According to Edward Moya, Senior Market Analyst at OANDA, “New virus strains might complicate the outlook and lead to harsher lockdowns that will cripple the crude demand outlook for the first quarter.” Carsten Fritsch at the German Commerzbank also warned of the “threat of a price setback.”