U.S. Oil Drillers Cut Rigs For 6th Week To Nov 2009 Lows

Source: Bloomberg

U.S. energy firms cut oil rigs for a sixth week in a row to the lowest level since November 2009, oil services company Baker Hughes Inc said Friday, as drillers remained cautious in returning to the well pad despite crude futures climbing to their highest levels this year.

Drillers cut 11 oil rigs in the week to April 29, bringing the total rig count down to 332, Baker Hughes said in its closely followed report. RIG-OL-USA-BHI 

The number of U.S. oil rigs currently operating compares with the 679 rigs operating in the same week a year ago. 

Energy firms have slashed spending by sharply reducing 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 a near 13-year low around $26 in February.

U.S. crude futures, however, have spiked nearly 80 percent in the past two months and hit 2016 highs of just under $46 on Friday as market sentiment turned more upbeat despite the persistent oversupply.

U.S. crude futures were above $47 a barrel for the balance of 2016 and about $49 for calendar 2017. 

Baker Hughes said at its quarterly earnings release on Wednesday that it expected the U.S. rig count to start stabilizing in the second half of the year, although it did not expect any meaningful hike in oil drilling activity.

Whiting Petroleum Corp's Chief Executive Jim Volkers said the firm would like oil prices to stay at or above $50 for at least 90 days before deciding to reduce drilled-but-uncompleted well count in Colorado. 

The world's No. 1 oilfield services provider Schlumberger NV also said 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 rig count is one of several indicators of future oil and gas production. Other indicators include drillers ability to get more out of each well and the completion of drilled but uncompleted wells.