Rising rigs mean higher production, which could have a negative impact on crude oil prices. Oil fell in NY after the biggest drop in more than two weeks, on estimates that crude stockpiles continued to build up in the US.
The country's crude oil production is forecast to average 9 million barrels per day in 2017 and 9.5 million barrels per day in 2018, the country's Energy Information Administration said in its monthly Short-Term Energy Outlook released Tuesday.
PVM Oil Associates London brokerage analyst Tamas Varga was quoted by the news agency as saying: "The general perception is that OPEC is cutting production, which is supporting prices, but high stock levels, rising rig counts and growing USA production are capping gains".
"US production is starting to structurally rise again", said Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland.
At 6:17pm GMT, the Brent front month future contract for April delivery was down 1.58% or $0.88 to $51.94 per barrel, while the West Texas Intermediate (WTI) was 2.02% or $1.07 lower at $54.84 per barrel, as data published Baker Hughes pointed to yet another uptick in the number of USA and Canadian rigs.
Oil prices fall as reviving shale balances OPEC cuts
Oil dropped to the lowest in more than two weeks amid estimates that USA crude and gasoline inventories continue to climb. Prices averaged US$52.61 last month.
If fully implemented, the deal could wipe out about 1.8 million barrels a day from the global daily supply and push the market into a supply shortage as early as the third quarter of 2017.
Benchmark Brent crude LCOc1 was down 80 cents at $54.92 a barrel by 11:31 EST (1531 GMT). The agency forecasts United States crude production will increase from estimated 8.9 million barrels per day in 2016 to 9 million barrels per day this year. Stockpiles are at 494.8 million barrels, the highest seasonal level in more than three decades, according to weekly data compiled by the EIA since 1982.
The British oil and gas company, whose fourth quarter profits fell short of street expectations, had previously targeted a breakeven oil price of $50-55 a barrel.
"Traders are betting on prices going up but they are impatient", said Amrita Sen, the chief oil analyst at Energy Aspects.