Baker Hughes (BHI) reported Friday, Oct. 21, that U.S. oil and natural gas drillers brought 14 rigs online in the latest week as positive sentiment continues to build among operators that a recovery is on the horizon.
The Houston oilfield services giant said the count is up to 553 this week, while oil rigs climbed 11 to 443 and natural gas rigs rose by 3 to 109. Miscellaneous rigs were flat at 2.
The news indicates that drillers are continuing to bolster activity as crude oil prices hover above the psychologically significant $50 per barrel mark.
Crude was fluctuating Friday, however, as an OPEC-fueled rally has died down and traders continue to look for more evidence of fundamental supply and demand support after the U.S. Energy Information Administration reported Wednesday that crude inventories fell by 5.2 million barrels last week.
Global benchmark Brent crude futures were trading up about 0.3% Friday afternoon to $51.68 per barrel, while U.S. benchmark West Texas Intermediate crude contracts for December delivery were up slightly to $50.70.
Meanwhile, the U.S. offshore industry continues to show little signs of life as Baker Hughes said Friday that count remains flat at 23, but down 12 from this time last year.
Offshore markets remains challenging at the moment, according to Stephens analyst Matthew Marietta, as the backlog of orders continues to erode and an overall lack of notable contracting activity persists.
Marietta noted in a recent report that 12 offshore rigs have received contracts or extensions in the prior 30 days, but 10 of those have a duration of less than 6 months.
All told, Baker Hughes' U.S. rig count is down by 234 from last year's count of 787, with oil rigs down 151, gas rigs down 85, and miscellaneous rigs up 2.
Despite the uptick in activity, the majority of oilfield services companies on the S&P 500 were slumping Friday as a strengthening dollar and profit taking kept WTI crude prices unsettled. Schlumberger (SLB - Get Report) led the retreat with a decline of more than 3% around 1 p.m.
FMC Technologies (FTI - Get Report) was the lone S&P 500 OFS name in the green Friday afternoon after the company reported adjusted earnings of 35 cents per diluted share, topping analysts' estimates of 23 cents per share.
SLB's less than dazzling earnings report, which saw the company report a 25 cents per share profit on $7 billion in revenues for the quarter, was likely disappointing to investors Friday after competitor Halliburton (HAL - Get Report) reported a third quarter profit this week that took the market by surprise.
Halliburton's quarter was a good indicator that North American unconventional drilling could lead the recovery, according to RBC Capital Markets analyst Kurt Hallead, and the results had a positive read-through for the Canadian pressure pumping industry.
The Canadian rig count fell this week, dropping 22 rigs from last week, to 143. Canadian oil rigs were down by 21 week-over-week to 69, while the number of gas rigs fell by 1 to 74.