U.S. energy firms cut the number of oil and natural gas rigs operating to a record low for a 12th week in a row, although they added one oil rig in the first weekly increase since March as a recovery in crude prices tempt some producers back to the well pad.
The U.S. oil and gas rig count, an early indicator of future output, fell by two to an all-time low of 251 in the week to July 24, according to data from energy services firm Baker Hughes Co going back to 1940.
That was 695 rigs, or 73%, below this time last year.
U.S. oil rigs rose to 181, while gas rigs fell three to 68, their lowest on record according to Baker Hughes data going back to 1987.
Even though U.S. oil prices are still down about 33% since the start of the year due to coronavirus demand destruction, crude futures have jumped 118% over the past three months to about $41 per barrel July 24 on hopes global economies will snap back as governments lift lockdowns.
Analysts said higher oil prices will encourage energy firms to slow rig count reductions and possibly start adding some units later this year.
“Rig activity is near the bottom unless there is a substantial drop in prices,” said James Williams of WTRG Economics in Arkansas, noting “The shut-in wells are already coming back online.”
Analysts at Tudor, Pickering, Holt & Co. said the rig count will “find a bottom soon, with incremental rig adds beginning to materialize towards the back half of the third quarter.”
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