U.S. energy firms reduced oil rigs for an eighth week in a row this week but slowed the rate of those cuts to just one rig, data showed on Friday, a sign some drillers may soon return to the well pad with hopes of rising crude prices in the future. The total rig count for the week ended Oct. 23 fell to 594, the least since July 2010. Over the past eight weeks, drillers cut a total of 81 rigs, oil services company Baker Hughes Inc said in its closely followed report.
The reduction this week was the lowest since drillers started cutting rigs at the start of September after adding 47 rigs over the summer. Drillers decided to add the rigs over the summer during the spring when crude prices averaged $60 a barrel in May and June. U.S. oil futures this week however have lost over 5 percent to average $45 a barrel, sliding for a second straight week, on continuing oversupply concerns even as China’s latest interest rate cut raised hopes for stronger demand from the world’s top energy consumer.
The total count this week is less than half the 1,595 oil rigs in the same week a year ago. Since hitting an all-time high of 1,609 in October 2014, weekly rig count reductions have averaged 19. With natural gas rigs up one to 193 this week, the total oil and gas rig count held at a 13-year low, according to Baker Hughes. The rig count is one of several indicators traders look at in trying to figure out whether production will rise or fall over the next several months.
Other factors include how fast energy firms complete previously drilled but unfinished wells and rising well efficiency and productivity. Despite the overall decline in oil rigs, drillers added rigs in two of the four major U.S. shale oil basins this week. They added three in the Niobrara in Colorado and Wyoming and one in the Eagle Ford in South Texas, but removed three in the Permian in West Texas and eastern New Mexico.
There were no changes in the Bakken in North Dakota and Montana. On a weekly basis, the amount of U.S. oil pulled out of the ground has remained about 9.1 million bpd since the start of September, according to EIA’s weekly field production report, well below the 9.6 million-barrel per day peak seen in April.