Baker Hughes Inc. (NYSE: BHI) released its weekly rig count, and despite oil not being over $50 a barrel, the count of rigs was still higher. What this means is that oil no longer has to be at $50 for oil and gas operators to selectively drill for profits in the oil patch. Will it continue? And if so, won’t more drilling just add more supply and drive prices lower?

West Texas Intermediate (WTI) crude was trading at $44.33 late on Friday, up 84 cents from Thursday’s trading. Oil spent part of May and June above $50, but then the drilling activity picked up, and storage remains filled up. Still, it’s currently looking better than the $40 per barrel price that was seen right at the start of August.

The U.S. rig count was up 17 rigs to 481 in the past week. Oil rigs were up by 15 to 396, and the number of gas rigs rose by two to 83. The number of miscellaneous rigs was unchanged at two. This marked the seventh consecutive gain in U.S. rigs.

Before thinking that this increase in rigs is a return the good old days, guess again. Baker Hughes showed that the U.S. rig count is still down some 403 from the same week last year, when the rig count was 884. Of the 403 rig decrease, oil rigs down were down by 276 and gas rigs were down by 128 (miscellaneous rigs up one).

Where the bulk of the rigs are going up is to the Permian Basin. That area had 12 of the week’s 17 total rig gains. No wonder we keep hearing from analysts about the Permian being the sweet spot now. Deutsche Bank raised targets on its Permian picks and Merrill Lynch has three top Permian picks to buy.

The U.S. offshore rig count was unchanged from the prior week at 17, but this is down by 18 rigs year over year.

It’s not just the United States where rig counts were up. Canada had a gain of four to 126 rigs. Oil rigs were up five to 65, while gas rigs were flat at 60 and miscellaneous rigs were down one to one.

The Canadian rig count is also lower than a year ago. That count fell by 85 rigs from a 2015 count of 211 for the same week. Year over year, the count for oil rigs was down by 35 and gas rigs were down 51 (miscellaneous rigs up one).

Baker Hughes shares were trading up 2.4% at $49.76 on Friday’s close. Its consensus analyst price target is $51.63 and it has a 52-week range of $37.58 to $58.23.

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The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) closed down 0.8% at $28.29 on Friday. Its 52-week range is $20.46 to $32.78.

The United States Oil (NYSEMKT: USO) exchange-traded product is an eroding asset due to its investing in futures and having roll dates. There also can be tracking errors that occur. Still, it was up 2.8% at $10.49 on Friday. Its 52-week range is $7.67 to $16.20.

Now let’s consider what Goldman Sachs was calling for, with stable oil prices from now through mid-2017. If that firm is finally right on its outlook, then this is a time when the rig counts may keep rising. Perhaps many of these oil companies are signaling that they can remain profitable even with oil around $40 per barrel. Maybe.

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