U.S. energy companies added oil and natural gas drilling rigs this week as crude production returns to pre-pandemic levels. President Joe Biden also criticized oil producers for making huge profits from high oil prices rather than increasing output.
In Friday’s closely watched report, Baker Hughes Co stated that the oil and gas rig count, which is an indicator of future output, increased seven to 740 during the week to June 17. This was its highest level since March 2020.
This week saw oil rigs rise four to 584, their highest level since March 2020. Gas rigs grew three to 154 this week, their highest point since September 2019.
The rig count has increased for 22 consecutive months through May. However, weekly increases are incremental and crude oil production has remained largely flat over the past few months. It rose to 12 million barrels per day, the highest level since April 2020, according to data this week.
The government forecasts that the total output from the U.S. major shale oil basins in July will increase by 143,000 bpd, to 8.901 million bpd in July. This is the highest level since March 2020.
Biden has criticized oil producers over the past week for giving out billions of dollars to shareholders and building cash reserves instead of increasing output. This strategy is irking lawmakers as well as voters, as inflation surges to its highest level in 40 years.
Crude oil prices have risen by 46% to $110 per barrel so far this year, largely due to a reduction in Russian supplies following the invasion of Ukraine on February 24th.
Based on Reuters estimates of the potential output if half of the existing investor payouts were used to support new oil and gas drilling, the tradeoff between increasing payouts for a quarter and greater production spending has deprived this market of almost half a million barrels per day.
These extra barrels could boost U.S. production to levels that exceed the 2019 pre-pandemic record of 12.23 Million bpd. According to the government, the output will rise by 720,000 bpd to 1192 million bpd by 2022.
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