US shale drilling fastest growing in a month

Shale explorers returned to growth mode this week, adding the most rigs in a month, as the Biden Administration asks them to release more crude to offset a ban on Russian oil.

This week 8 oil drilling rigs were added in United Statesreaching a total of 527, the largest increase since February 11, according to data from Baker Hughes Co. posted on Friday.

Most of the expansion, which follows last week’s fall of 3 oil rigs, occurred in the world’s most active shale patch, the Permian Basin of western Texas and New Mexico.

President Joe Biden has urged US oil companies to increase production, as sanctions imposed on Russia have helped push oil prices above $100 a barrel.

The crude West Texas Intermediate, which was already on the rise before the war, accumulates an increase of 66% since the beginning of November.

However, the call for more production clashes with commitments major shale explorers have made to prioritize financial discipline over growth, with many wary given Biden’s historic hostility to fossil fuels and the risk that new drilling is not profitable in the long term.

Drilling activity, which has become more efficient over time by allowing explorers to do more with fewer rigs and less expense, remains more than 20% below pre-pandemic highs.

Rig count is a closely watched metric because it is an indicator of future crude production. However, the relationship is imperfect due to the time that elapses between the drilling of a well and the start of production.

Most of the rig count growth in the past year was due to explorers trying to ramp up production to look for buy deals.