For the first time in three weeks, U.S. energy firms have reduced the number of working oil rigs as producers are seeking plans to cut back on new exploration.
Drillers cut 8 oil rigs in the week to Dec. 27, bringing the total count down to 677, the lowest since the week to November 15, energy services company Baker Hughes Co said Friday in its closely followed survey. RIG-OL-USA-BHI There were 885 active platforms in the same week a year ago.
Which brought down the oil rig count for the year by 208, its first annual decrease since 2016. Nevertheless, this reduction is much smaller than the historic cut in 2015 from 963 rigs, according to data from Baker Hughes back to 1987.
The number of rigs increased for the month in 13 for the first time.
For the year, for the first time since 1999, the rig count fell for a record seven consecutive quarters for a fourth-quarter in a row.
Before this month, as independent exploration and production companies cut spending on new projects as shareholders seek better returns in a low energy price setting, the oil rig count, an early indicator of future performance, fell for a record 12 months in a row.
Despite this year’s drop in the number of rigs drilling new wells, U.S. oil output has continued to grow. This is partly because the productivity of the remaining rigs-the quantity of oil produced by new wells per rig-has increased to record levels in most large shale basins.
But the pace of growth in production has slowed.
The U.S. Energy Information Administration has forecast crude production to grow from a record 11.0 million BPD in 2018 to 12.3 million barrels per day (BPD) in 2019 and 13.2 million BPD in 2020.
U.S. crude futures traded about $62 a barrel on Friday, placing the market on track to rise for the week on data showing U.S. crude stocks fell more than anticipated, improving economic data and optimism over a U.S.-China trade deal. Looking ahead, U.S. oil futures traded about $60 a barrel for 2020’s balance and $55 for 2021’s timeline. That’s equivalent to a 2018 average of $64.90.
The total number of oil and gas plants operating in the United States has reached 943 years to date. Some plants produce oil as well as coal.