Drillers Hike Up Rig Activity Again as Crude Production Soars

(Bloomberg) -- Shale explorers boosted drilling activity in the U.S. oil patch to the highest in three years even as American crude output touched unprecedented levels.

U.S. working oil rigs rose by 11 this week to 808, the highest since March 2015, according to data from Baker Hughes. It's the ninth increase in the past 11 weeks.

Oil explorers are expected to crank up spending in the U.S. by 37 percent to $134 billion this year, assuming an underlying average oil price of $65 a barrel, according to Raymond James & Associates Inc. That would follow a 77 percent hike in 2017, analysts including Pavel Molchanov and Marshall Adkins wrote this week in a note to investors.

“U.S. spending will still likely be up sharply, even as public E&Ps become more returns driven,” the analysts wrote. “If oil prices remain in the mid-$60s, there is clearly room to flex up spending as the year progresses, since many of these budgets were set on the assumption of mid-$50s oil.”

Crude output in the U.S. rose by 27,000 barrels a day last week to 10.5 million, according to the Energy Information Administration.

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net.

To contact the editors responsible for this story: Reg Gale at rgale5@bloomberg.net, Joe Carroll, Carlos Caminada

©2018 Bloomberg L.P.