23 April 2016, New York — U.S. energy firms cut oil rigs for a fifth week in a row to the lowest level since November 2009, oil services company Baker Hughes Inc said Friday, as energy firms continue to slash spending despite a bigger than 60 percent spike in futures since hitting near 13-year low in February.
Drillers cut eight oil rigs in the week to April 22, bringing the total rig count down to 343 Baker Hughes said in its closely followed report.
The number of U.S. oil rigs currently operating compares with the 703 rigs operating in the same week a year ago. In 2015, drillers cut on average 18 oil rigs per week for a total of 963 for the year, the biggest annual decline since at least 1988 amid the biggest rout in crude prices in a generation.
Before this week, drillers cut on average 12 oil rigs per week for a total of 185 so far this year.
Energy firms have sharply reduced oil and gas drilling since the collapse in crude markets began in mid-2014. U.S. crude futures fell from over $107 a barrel in June 2014 to near 13-year low around $26 in February.
Schlumberger NV said in the earnings release on Friday it will remain cautious in adding capacity even after energy firms show signs of recovery since it believes the industry will continue cutting costs through the coming quarter.
The world’s No. 1 oilfield services provider said its first quarter revenue decrease was one of the steepest quarterly declines for the company since this downturn started driven in part by a drop in activity, persistent pricing pressure, project delays, job cancellations and activity disruptions.
U.S. crude futures this week were heading for the third week of gains, trading around $43 a barrel, as market sentiment turned more upbeat despite the persistent oversupply. [O/R]
U.S. crude futures were fetching around $45 a barrel for the balance of 2016 and about $47 for calendar 2017.
Analysts at Cowen & Co, a U.S. financial services firm, expect U.S. oil and natural gas land rigs to bottom between 375 and 400 sometime in the second quarter before increasing in the fourth quarter. The total land rig count was 401, according to Baker Hughes.
With the decline in oil rigs this week and the loss of one natural gas rig, total U.S. rigs fell for a 17th week in a row, down nine to 431, the lowest since at least 1940, according to Baker Hughes data going back that far.
*Scott DiSavino; Editing – Marguerita Choy – Reuters