U.S. energy firms cut oil rigs for a sixth week in a row this week, the longest streak of weekly declines since June, data showed on Friday, a sign low prices continued to keep drillers away from the well pad. Drillers removed nine oil rigs in the week ended Oct. 9, bringing the total rig count down to 605, oil services company Baker Hughes Inc said in its closely followed report. That total was the least since July, 2010.
Drillers had cut a total of 61 rigs over the prior five weeks. Since hitting an all-time high of 1,609 during this week a year ago, weekly rig count reductions have averaged 20. Baker Hughes also reported a reduction in natural gas rigs, bringing total U.S. oil and gas rigs to a 13-year low. Gas rigs were down six this week to 189, the lowest level in at least 28 years, according to Baker Hughes data going back to 1987.
The oil rig reductions over the past month erased the 47 rigs added over the summer when drillers followed through on plans to add rigs announced in May and June when U.S. crude futures averaged $60 a barrel. U.S. oil futures this week averaged $48 a barrel, up from a $45 average last week, on concerns over Russia’s entry into the Syrian conflict and a rising Chinese stock market.
On Friday, U.S. futures were trading around $50 a barrel, up just 1 percent on the day, in choppy trade as speculators took profits on a big weekly surge for Brent. Drillers reduced the number of oil wells in three of the four major U.S. shale oil basins this week. Ten were cut in the Permian in West Texas and eastern New Mexico; two in the Eagle Ford in South Texas; and one in the Bakken in North Dakota and Montana.
They added one in the Niobrara in Colorado and Wyoming. “The current rig count is still pointing to U.S. production declining sequentially between the second quarter and fourth quarters of 2015,” analysts at Goldman Sachs said, noting production growth was expected to resume in 2016.
Despite drilling cutbacks, U.S. oil production edged up to 9.4 million barrels per day (bpd) in July from 9.3 million bpd in June, according to the latest U.S. Energy Information Administration’s (EIA) 914 production report.