Oil prices reach the highest level in 7 years

For the sixth week in a row, US energy companies increased the number of operating oil and gas rigs, coinciding with the rise in oil prices to the highest level since 2014, prompting drillers to return to the wells rig.

According to Reuters, energy services company Baker Hughes said in its closely watched report that the number of oil and gas rigs has been increased, which is an early indicator of future production.

In this regard, the number of rigs increased from 10 to 543 in the week until October 15, the highest level since last April 2020, bringing the total number of rigs to 261 rigs, or 93%, during this time last year.

The number of US oil rigs also rose from 12 to 445 this week, the highest level since April 2020, while gas rigs fell to 98, the lowest level since last August.

In a related context, US crude futures recorded a rise last week, reaching their highest levels since 2014, amid expectations of a supply deficit over the next few months, as the rocketing rise in gas and coal prices encouraged a shift to oil products.

Some energy companies plan to increase spending in 2021 after cutting drilling and completion expenses in 2019 and 2020. The move comes as oil prices have risen 69% so far this year, according to energy companies.

This increase in spending remains small, as most companies continue to focus on boosting cash flow, reducing debt, and increasing shareholder returns rather than adding production.

US oil production is expected to decline from 11.3 million barrels per day in 2020 to 11 million barrels per day in 2021, before rising to 11.7 million barrels per day in 2022, according to government projections. That compares with an all-time high of 12.3 million barrels per day in 2019.

Enverus, which releases its rig count data, said prospectors added 10 rigs in the week through Oct. 13, 7 of them in Permian shale in Texas and New Mexico. Analysts said: There are many reasons why prospectors add oil rigs more than gas.

The US domestic demand for gas has declined since it reached a record level in 2019, due to the decline in demand caused by the Corona pandemic in 2020, and the pandemic caused a rise in the prices of power generators in 2021.