The count of active oil rigs in the US rose again this week, by eight to 591, according to Baker Hughes.
The count, up for a fourth straight week, is more than 80% higher than the low reached in May 2016. The tally is at its highest level since the week of October 23, 2015.
Four gas rigs came online, taking the total to 149. With one miscellaneous rig remaining in use, the total rig count was up 12 to 741.
Oil drilling has increased as oil prices have recovered after the plunge in 2014.
“Production proved even more resilient than the rig count: it took 35 weeks after the rig count started to decline before production began its own decline,” said Societe Generale commodity strategists in a recent note. “From peak to trough, production only fell by approximately 12%.”
“The resilience of US onshore oil supply in the face of lower prices demonstrates the profound technological transformations witnessed in the shale industry.”
Robust US production now threatens to undermine efforts by the Organisation of Petroleum Exporting Countries (OPEC) and some non-members to reduce the global oversupply of oil. The International Energy Agency said Friday that OPEC has achieved a record 90% compliance with its agreement last November to cut production.
“The oil market is very much in a wait-and-see mode,” the IEA added.
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