U.S. Oil Rigs Reach New High as Drillers Chase Price Surge

(Bloomberg) -- U.S. oil producers expanded drilling to a new level for the year, as higher crude prices enticed the industry to pour more money into the Permian shale basin.

Working oil rigs rose by 10 this week to 869, their biggest increase since late May, according to data released Friday from oilfield service provider Baker Hughes. The Permian in West Texas and New Mexico continued to lead the U.S. drilling revival, adding six rigs.

Producers have announced billions of dollars in new investments in the Permian and elsewhere in recent weeks, as they chase oil prices near three-year highs. That’s helping to fill in for disruptions in global supplies in Iran, Venezuela and elsewhere, although it’s also raised concerns about overspending and overproduction by U.S. companies. West Texas Intermediate oil prices have given back some of the gains in recent weeks.

The increase “is likely seen to be as negative for WTI oil prices as the oil rig count trend changed direction yet again this week to the upside," Leo Mariani, a NatAlliance Securities analyst, wrote in a note to clients.

WTI was hovering below $68 a barrel on Friday, on track for its sixth weekly drop as worries about weakening energy demand.

Crude output in the U.S. fell by 100,000 barrels a day to 10.8 million last week, according to the Energy Information Administration.

The Permian added the most oil rigs among U.S. shale basins, Baker Hughes said. The Eagle Ford play in South Texas had one fewer rig compared with the prior week, while the activity was unchanged in the DJ-Niobrara and Williston basins. The rest of the increase was spread in drilling regions elsewhere in the U.S.

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