| Sony Kassam & Jeremy Van Loon | September 28, 2016
The biggest reboot of U.S. oil and gas rigs in two years will gain traction as higher prices prompt producers to resume investment in the most profitable plays, according to a report by Platts RigData.
Demand for land rigs will rise 29 percent next year to 579, the S&P Global Platts unit said in a report released at the Benposium East conference in New York on Wednesday. Platts RigData forecasts average West Texas Intermediate crude prices to climb 23 percent to $52.18 a barrel in 2017. The Henry Hub natural gas benchmark is seen increasing 26 percent to $3.05 per million British thermal units.
Producers from EOG Resources Inc. to Pioneer Natural Resources Co. are putting rigs back to work and buying acreage in some of the higher-return plays as they gear up to resume growth after crude prices rebounded. Oil got a further boost on Wednesday when the Organization of Petroleum Exporting Countries agreed on the outline of a deal that will cut production for the first time in eight years. Futures jumped as much as 6.2 percent in New York, extending their rally from this year’s low to about 80 percent.
"Correlation between rigs and prices is very strong historically," Trey Cowan, senior industry analyst at Platts RigData, said by phone. "The stars are aligning from the seasonal cycles, and the cycle is going to be dictated by recovering oil prices."
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