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Rig count drops for fourth straight week, OPEC reaches agreement
U.S. rig count is at the lowest level it’s been since December 2016. Oil futures down more than 50% since the beginning of 2020 as Saudi Arabia and Russia cut prices and boosted output in a battle for market share.
Saudi Arabia and Russia have struck a deal with other major oil-producing nations to slash production as they attempt to stabilize a market that has been upended by the coronavirus.
Members of OPEC and their allies, including Russia and Mexico, announced Sunday that they have agreed to cut production by 9.7 million barrels a day in May and June, the deepest cut ever agreed to by the world's oil producers. After that, the group will steadily ramp up production until the agreement expires in April 2022.
Saudi Arabia has announced its official crude pricing for May, selling oil more cheaply to Asia while keeping prices flat for Europe and raising them for the U.S., after OPEC and its allies agreed the biggest output cut deal in history.
More than half the total U.S. oil rigs are in the Permian Basin in West Texas and eastern New Mexico, where active units dropped by 35 this week to 316, the lowest since March 2017. That was the biggest weekly decline since February 2015.
U.S crude production last week fell 600,000 barrels per day to 12.4 million bbl/d, and is expected to fall by nearly 2 million bbl/d by next year, according to the government.
IHS Markit said overall North American E&Ps plan to reduce spending in 2020 by about 36%, or $24.4 billion, compared to last year.
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