June 7 (UPI) -- The number of rigs targeting oil and gas reserves in the United States in May was double the level from last year, Baker Hughes reported.
Rig counts serve as a loose metric to gauge the industry's interest in spending on exploration and production in a particular sector. A report last year from consultant group IHS Markit found new production from the heavier oil sands in Canada, for example, needed crude oil prices higher than $70 per barrel in some cases to get off the ground. U.S. shale oil basins, meanwhile, have become more efficient and therefore more resilient to a weaker market.
Oilfield services company Baker Hughes reported a net gain in North American rig counts, which were up 1.4 percent in April from the previous gain, though the increase came from the United States.
The May rig count in the United States was 893, up 4.6 percent from April. The Canadian rig count for May was 85, down more than 20 percent from the previous month.
The price for Brent crude oil, the global benchmark, improved in May in anticipation of production decisions from the Organization of Petroleum Exporting Countries, but has moderated for most of June. Brent was trading just below the $50 per barrel mark early Wednesday.
In the past four years, the average break-even price for shale operations in the United States declined from around $80 per barrel to $35 per barrel.
Rig counts do not necessarily translate to production trends because of lag times and efficiency. Rig counts, however, can influence crude oil prices because of the general indication for a particular sector. Strong production gains from the United States have offset a move by the Organization of Petroleum Exporting Countries to balance the market with a cap on output.