While companies have idled 151 rigs in five shale formations since reaching a peak of 1,157 in October, they’ll need to park another 200 for growth to stall, according to data from the U.S. Energy Information Administration. Output there will reach a record 5.47 million barrels a day in March even though the number of rigs exploring for oil is the lowest since 2013.
The spending cuts led to speculation that U.S. gains would slow, eroding a global supply glut that sent prices tumbling last year. Oil has jumped 19 percent since closing at a six-year low of $44.45 a barrel on Jan. 28. Improving technology and a focus on the most promising acreage has made the rig count, a closely watched barometer of drilling activity, a less reliable indicator of future output.
“The trend in U.S. oil production is the key variable in the oil market this year, so any sign that the great growth engine is slowing is eagerly anticipated,” said Jim Burkhard, a Washington-based vice president with IHS Inc., the global analytics firm headquartered in Englewood, Colorado. “There may be some false starts and we may have just seen one.”