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U.S. oil drillers add rigs for sixth week in a row

U.S. drillers this week added oil rigs for a sixth consecutive week, according to a closely followed report on Friday, despite crude prices falling to April lows below $40 a barrel this week.

An oil rig is set up northwest of Dickinson in 2014.
An oil rig is set up northwest of Dickinson in 2014.

U.S. drillers this week added oil rigs for a sixth consecutive week, according to a closely followed report on Friday, despite crude prices falling to April lows below $40 a barrel this week.

Some producers are still boosting spending on expectations for higher prices in the future.

Drillers added seven oil rigs in the week to Aug. 5, bringing the total rig count up to 381, compared with 670 a year ago, energy services firm Baker Hughes Inc said.

After rising by 44 oil rigs in July, the most in a month since April 2014, analysts forecast the rig count would be choppy over the next few months due to seasonal drilling declines and a near 20 percent drop in crude prices on oversupply concerns since topping $50 a barrel in early June.

"We expect weekly changes in the rig count will be choppy in coming months and could stall or even decline as seasonal drilling activity declines," analysts at U.S. financial services firm Cowen & Co said in a note this week.

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U.S. crude futures were down about 1 percent on Friday at above $41 a barrel after the dollar surged on robust U.S. jobs data.

Earlier in the week, U.S. crude dropped below $40, pushing it further away from the $50 level hit in June that analysts and producers said would prompt their return to the well pad.

Recent price declines over the past several weeks, however have not stopped companies from planning to add more rigs over the next several months into next year.

Cowen noted several companies, including Apache Corp., Chesapeake Energy, Cimarex Energy and Marathon Oil, announced plans in the past week to add rigs.

Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast total oil and natural rig count would average 491 in 2016, 683 in 2017 and 961 in 2018.

The total oil and gas rig count bottomed at 404 in mid May, the lowest level since at least 1940, and increased by one to 464 in the week ended Aug. 5, according to the Baker Hughes data. In 2015, the total rig count averaged 978.

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