Rig count increases in North America, according to data from Baker Hughes. Gain follows surge in the price for crude oil. Photo by David Gaylor/Shutterstock
HOUSTON, Dec. 7 (UPI) -- With oil prices recovering from yearly lows, oilfield services company Baker Hughes said there was an increase in U.S. exploration and production activity.
Baker Hughes reported an average 580 rigs in service in the United States in November, up 36, or 6.6 percent, from the previous month. That followed a 3.3 percent, or $2 per barrel, jump in November prices for West Texas Intermediate, the U.S. benchmark price for crude oil.
WTI is holding above the $50 per barrel mark since members of the Organization of Petroleum Exporting Countries in late November agreed to hold output at 32.5 million bpd starting in January. Last week, Baker Hughes reported 597 rigs in active service in the United States.
Rig numbers serve as a barometer to gauge how confident companies are in investing in new exploration and production activity. Outside the United States, rig counts declined slightly in the Middle East from October. The rig count in Canada improved 11 percent to 171 in November.
Though there's a lag time between when rig activity could be reflected in production figures, the recovery indicated in Baker Hughes' data for November suggests North American output could rebound.
The OPEC production agreement is meant to pull a market tilted toward the supply side back into balance. A rush of oil from U.S. shale basins in part kept the markets flush with oil at the start of this year and pulled oil prices below the $30 per barrel mark.
A best-case scenario for OPEC members may be a so-called Goldilocks value for oil, one that's not so low that it crimps economic growth for producers and not so high that it reinvigorates U.S. shale oil production.
Traders may be renewing their focus on rig counts to gauge the industry's response to the exponential rise in crude oil prices. Baker Hughes publishes weekly rig count activity and a report Friday will be the first that reflects activity since OPEC's agreement last week in Vienna.
Baker Hughes is one of the largest companies providing services to the exploration and production side of the energy sector. This quarter, it took a $429 million net loss. That follows steep reductions in staffing, but marks an improvement over the $911 million loss during the previous quarter.