U.S. energy firms cut the number of oil and natural gas rigs operating to a record low for a 15th week even as higher oil prices prompt some producers to start drilling again.
The U.S. oil and gas rig count, an early indicator of future output, fell by three to an all-time low of 244 in the week to Aug. 14, according to data from energy services firm Baker Hughes Co. going back to 1940. That was 691 rigs, or 74%, below this time last year.
U.S. oil rigs fell by four to 172 this week, their lowest since July 2005, while gas rigs rose by one to 70, according to data.
As the rig count declines, U.S. crude oil production is expected to fall by 990,000 bbl/d this year to 11.26 MMbbl/d, the U.S. Energy Information Administration said Aug. 11, a steeper drop than its forecast last month for a 600,000-bbl/d fall.
Even though U.S. oil prices are still down about 31% since the start of the year due to coronavirus demand destruction, U.S. crude futures have jumped 123% over the past four months to around $42 per barrel Aug. 14 on hopes global economies and energy demand will snap back as governments lift lockdowns.
Analysts said higher oil prices will encourage energy firms to slow rig count reductions and start adding units later this year.
“It appears the industry has found a bottom over the last month, at least temporarily,” analysts at energy data provider Enverus said, noting “This level of activity is still fragile and depends on avoiding any more shocks to global demand.”
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