US Oil Drillers Cut Rigs for 14th Week in 15

U.S. energy firms this week cut oil rigs for a 14th week in the last 15, data showed on Friday, a sign drillers were still waiting for higher prices before returning to the well pad.

 

Drillers removed 21 oil rigs in the week ended Dec. 11, bringing the total rig count down to 524, the least since April 2010, oil services company Baker Hughes Inc said in its closely followed report.

 

The decline was the sharpest since October.

 

That decrease brings the total rig count down to about a third of the 1,546 oil rigs operating in same week a year ago. Since the end of the summer, drillers have cut 130 oil rigs.

 

U.S. crude oil futures averaged $37 a barrel so far this week, down from $41 last week.

 

On Friday, U.S. crude fell to a fresh six-year low as the international Energy agency (IEA) warned global oversupply could worsen in the new year.

 

U.S. oil fell as low as $35.35 a barrel on Friday, its lowest level since February 2009.

 

Energy traders noted the rate of weekly oil rig reductions since the start of September, about nine on average, was much lower than the 18 rigs cut on average since the rig count peaked at 1,609 in October 2014, due in part to expectations of slightly higher prices in the future.

 

U.S. crude futures for next year were trading around $42 a barrel, down from $44 last week, according to the full year 2016 calendar strip on the New York Mercantile Exchange.

 

Higher prices encourage drillers to add rigs. The most recent time crude prices were much higher than now was in May and June, when U.S. futures averaged $60 a barrel.

 

In response to those higher prices, drillers added 47 rigs over the summer.

 

The rig count is one of several indicators traders look at to predict whether production will rise or fall in future months. Other factors include how fast energy firms complete previously drilled but unfinished wells and increases in well efficiency and productivity.

 

U.S. oil production edged up to 9.4 million barrels per day (bpd) in September from 9.3 million bpd in August, according to the latest U.S. Energy Information Administration (EIA) 914 production report.

 

On a weekly basis, U.S. oil output remained around 9.2 million bpd for a sixth week in a row after holding at 9.1 million bpd for eight consecutive weeks since the start of September, according to EIA's weekly field production report. That, however, is still well below the 9.6 million bpd peak seen in April.


(Reporting by Scott DiSavino; Editing by Marguerita Choy)