U.S. oil's cautious return from COVID-19

There are fresh signs that U.S. oilfield activity is increasing alongside the return of demand and higher prices, but don't look for a return of record pre-pandemic production soon — or maybe ever.

Driving the news: The number of active U.S. oil rigs rose again last week, per the oilfield services company Baker Hughes' rolling tally.

Why it matters: It's the latest increase since COVID-19 significantly lowered oil consumption and prices cratered last year. The rig count is a rough proxy for the future output trajectory.

Yes, but: Reuters' coverage notes that most producers are "focusing on capital discipline and investor returns, rather than expanding supply."

• If that holds, it's a reversal of years when they emphasized output above profit and shareholder rewards.
• World-leading U.S. production reached a new record of nearly 13 million barrels per day at the end of 2019, but companies piled up lots of debt along the way.

The big picture: A recent Bloomberg story explored the new dynamic.

• "After years of booms and busts that produced astronomical losses along with a whole lot of oil, the fracking industry seems to have found a sweet spot," it reports.
• One data point in the piece is that the sector is estimated to generate $30 billion in free cash flow this year.
• "[S]hale is entering a new, better era, with higher profitability," analyst Elisabeth Murphy of ESAI Energy LLC told Bloomberg.

What we're watching: The U.S. Energy Information Administration projects that domestic production will average 11.1 million barrels per day (bpd) this year and 11.8 million bpd in 2022. But those estimates issued monthly often change as analysts chase a moving target.