Rig Count Drops for 11th week in Last 12

U.S. energy firms this week cut the number of oil rigs for an 11th week in the last 12, data showed on Friday, a sign drillers were still waiting for higher prices before returning to the well pad en masse.

Drillers removed 10 oil rigs in the week ended Nov. 20, the biggest weekly decline since late October, bringing the total rig count down to 564, oil services company Baker Hughes Inc said in its closely followed report.

That is about a third of the 1,574 oil rigs operating in same week a year ago. After cutting 103 oil rigs over the past two months, drillers added two rigs last week.

U.S. crude oil futures averaged $41 a barrel so far this week, down from $43 last week, as crude inventories rose for the eighth consecutive week and were inching closer to record highs.

Crude prices on Friday briefly fell below $40 to the lowest level since August as the pressure of a persistent supply glut limited optimism for a price recovery.

In the minutes before Baker Hughes issued the report, U.S. crude prices gained about 30 cents to around $40.85 a barrel. The prices, however, did not react much after the report was issued.

The strength of the U.S. dollar, near seven-month highs, has a negative impact on crude prices, making oil and other commodities more expensive for holders of other currencies, analysts said.

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 number of rigs peaked at 1,609 in October 2014, due in part to expectations of slightly higher prices in the future.

Drillers cut rigs in two of the four major U.S. shale oil basins this week. They removed five in the Permian in West Texas and eastern New Mexico and one in the Niobrara in Colorado and Wyoming, while adding one in the Eagle Ford in South Texas. The number of rigs in the Bakken in North Dakota and Montana remained the same.

With the decline in oil rigs this week and no change in natural gas rigs, the total rig count fell to a fresh 13-year low.

Reporting by Scott DiSavino