U.S. oil benchmark rises to 3-year high

Analysts raise concerns about the impact on prices from next week’s OPEC+ session

The price of oil rose to a threeyear high Friday as the number of operating rigs in the U.S. jumped by seven, helping to offset any apprehension about last week’s unexpected increase in the nation’s crude stockpiles.

The price of West Texas Intermediate, the U.S. benchmark, settled 85 cents higher Friday at $75.88, the highest close since Oct. 3, 2018, when WTI settled at $76.41

Crude markets Friday were buoyed by the weekly tally of operating rigs in the U.S., which rose to 528, nearly double the 266 rigs operating a year ago and the highest since April 2020. The total, however, remains far below the peak of almost 1,100 at the end of 2018, according to oil field services firm Baker Hughes. The rig count is a leading indicator of the nation’s oil and gas production.

U.S. drillers are adding more rigs as oil prices have risen after

Hurricane Ida halted offshore production in the Gulf of Mexico in the days before the Category 4 storm made landfall Aug. 29 in Louisiana. Norwegian energy research firm Rystad last month said it expects that Ida-related supply outages will average about 300,000 barrels per day from August to December and about 120,000 to 125,000 barrels per day in the first quarter of 2022.

A surprise 4.6 million barrel increase last week in commercial oil supplies, as well as increases in supplies of gasoline and jet fuel, weighed on oil prices this week. More bad news could come out of the ministerial meeting of OPEC and is allies that starts Monday. The oil cartel’s apparent willingness to boost production would continue to weigh on U.S. oil producers in the coming week, according to Rystad.

“What OPEC+ will decide next week has particular gravity, as the alliance holds 9.2 million (barrels per day) of the world’s remaining spare oil production capacity of 10 million (barrels per day), making it effectively the strongest decision maker of the global oil market,” Rystad senior oil analyst Louise Dickson said

Friday.

Any increase in OPEC’s production could slow the return of U.S. producers to the nation’s oil fields, particularly the shale patches of Texas, where one rig was added last week.

The count in the Permian Basin of West Texas and New Mexico rose by three to 263. The count in the Eagle Ford of South Texas and the Haynesville of East Texas held steady at 37 and 47 rigs, respectively.