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Oil rigs back in service in U.S., Canada as prices stabilize

07/02/2015 03:40 EDT | Updated 07/02/2016 05:59 EDT
The number of North American oil rigs in use is up for the first time since December, as oil's sustained period in the $58 to $60 range encouraged drillers to turn on the taps.

The number of U.S. oil rigs rose by 12 to 640, after dropping for six months, according to drilling services company Baker Hughes. In Canada, there were four rigs back in service for a total of 139, but still 170 rigs fewer than there were one year ago.

West Texas Intermediate crude, which had bounced upward after taking a four per cent drop yesterday, reversed course. At the close, it was down 43 cents to $56.53 US a barrel.

Brent crude, the most common international contract, was at $61,85, down 16 cents. Canadian contract Western Canada Select was trading at $45.53 US a barrel, a gain of 57 cents.

Canadian dollar below 80 cents

The Canadian dollar is now at 79.67 US cents, slipping below 80 cents for the first time since early June, in response to the strong greenback. Investors are flocking to the U.S. dollar as a safe haven amid the uncertainty over the Greek economy.

The loonie was responding to news released Tuesday that the economy contracted in April, while the Bank of America issued a prediction that Canada would be in recession this quarter.

At the close, the S&P/TSX composite index was ahead 96 points at 14,649 as trading resumed after a one-day break for Canada Day. Stock markets were upbeat on improved oil prices.

On Wednesday, oil took a hit after the U.S. Energy Information Administration reported that oil stockpiles were growing.

Inventories rose by 2.4 million barrels last week, the first weekly climb since April, but gasoline inventories fell as U.S. drivers took to the roads for the summer driving season.

The $60 range for WTI is considered critical, because that price allows U.S. shale producers to break even.

Analysts have been predicting a return to drilling as oil spent most of last month in the $58 range.

"We believe about 100 rigs could be added to the U.S. rig count between now and year-end," analysts at Evercore ISI, a banking advisory firm, said in a report this week, noting "The bottom is passing and the upturn is arriving."

There is a global glut of oil and OPEC has refused to trim its production. That brought prices down from $107 this time last year.

However, the high U.S. dollar is making oil much less affordable in the rest of the world.

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