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U.S. rig count up 4 percent

The United States in January outpaced worldwide rig growth year-on-year.

By Daniel J. Graeber
U.S. rig count up 4 percent
The increase in rig activity in the United States since December has outpaced growth worldwide, oilfield services company Baker Hughes reports. File Photo by ekina/Shutterstock

Feb. 7 (UPI) -- The number of rigs actively exploring for or producing oil or gas in the United States was up 4.4 percent year-on-year in January, Baker Hughes reported.

Baker Hughes published its report for January rig counts. Rig counts reflect exploration and production activity and serve as a loose barometer for industry confidence in a particular market.

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In the United States, the oilfield services company recorded 683 rigs on average working as of January. That's up nearly 8 percent from December and 4.4 percent higher than January 2016.

The worldwide rig count was 1,918 for January, up 8.2 percent from December and up 1.4 percent year-on-year.

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Crude oil prices dropped below $30 per barrel in early 2016, but recovered to around $56 per barrel because members of the Organization of Petroleum Exporting Countries agreed in November to a managed decline aimed at correcting an over-supplied market.

The subsequent rise in crude oil prices may have the unintended result of bringing operators back to the more expensive basins in the United States. North American production added to the surplus behind the downturn for oil prices in early 2016.

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Nearly half of all the activity in exploration and production in the United States took place in Texas, the No. 1 oil producer in the United States. A federal report on U.S. production found the Permian shale basin in Texas is the most durable in the country.

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Estimates from the U.S. Energy Information Administration find total Permian production last year was 5 percent above 2015 levels and is on pace to increase up to 15 percent this year.

The latest federal estimate shows total U.S. crude oil production is on pace to average 9 million barrels per day this year, a slight increase from 2016. Most of the expected increase is coming from the U.S. Gulf of Mexico as rig numbers have yet to yield higher output from shale oil deposits.

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