The continued strength of oil prices has seen a steady increase in US oil drilling with the Permian shale oil basin seeing the lion’s share of activity.

Of the 411 oil and gas rigs operating in the US last week – a figure which is up nine over the previous week and down 361 from this time last year – 216 rigs were operating in the Permian.

Additionally, Primary Vision’s data showed that the US frac spread count – the set of equipment used for the fracture stimulation of shale wells – had increased by 17 to 182.

However, any hope that oil prices will keep appreciating were dashed last Thursday after prices dived more than 7 per cent to $US60 ($77.6) per barrel due a combination of profit-taking, a stronger dollar and a longer than expected COVID-19 vaccination campaign in Europe.

Rystad Energy noted that the delays and increase hesitancy around vaccinations in Europe could delay the recovery of 1 million barrels (MMbbl) of oil per day.

The fall in oil prices is in steep contrast to somewhat optimistic expectations that OPEC+ discipline in maintaining oil supply cuts, an accelerated recovery from COVID-19 and stimulus-inspired inflation would keep pushing oil prices up.

A Bloomberg opinion piece noted there is no shortage of oil and that any current supply constraints were due to OPEC+ withholding about 8MMbl per day to support prices.

It added that any sustained increase in oil prices above $US60/bbl will support the balance sheets of US shale oil producers, which will in turn lead to them increasing drilling activity to boost production.

This same increase in oil supply could ironically put a hard cap on oil prices.

Small cap oil and gas plays Buru Energy (ASX:BRU) is poised to kick off a major Canning Basin exploration oil drilling and seismic program that targets mean prospective resources of up to 97MMbbl.

This includes a development well at its producing Ungani oil field.

Additionally, the company will be carried for $16m of the cost of drilling two of the exploration wells in addition to a further significant seismic program carry across several Buru operated permits.

The first exploration well, Kurrakong-1, is being drilled on a large structure that is well defined by 3D seismic and is expected to have a similar good quality reservoir as the Ungani oil field and at similar depths.

Red Sky (ASX:ROG) intersected 16m of net oil pay at its Killanoola Southeast-1 well in South Australia, more than 10 times than it expected.

While it is still too early to determine how that translates into oil production, it is certainly an encouraging step in the right direction. Flow testing is expected to begin soon.

Meanwhile, 88 Energy (ASX:88E) is drilling ahead at its Merlin-1 oil well in Alaska with preliminary results expected within three to five days.

Should a subsequent wireline logging suite return encouraging results, it will then complete the well for production testing.