U.S. oil drillers cut their rigs for a ninth straight week, said energy services company Baker Hughes Inc, even despite crude prices this week trading at a seven-month high to $50 a barrel. That price is a key level, one that analysts and producers thought would trigger a return to the well pad. Driller cut 2 oil rigs this week, bringing a total rig count down to 316, its lowest since October 2009, which is about half of the 646 rigs this time last year. All of this according to baker Hughes.
Before this week, drillers on average cut 11 col rigs per week, for a total of 218. However last year they cut 18 oil rigs, for a total of 963, which was the biggest decline since at least 1988. All of this was amidst the biggest rout in crude prices for a generation. The rig count has definitely declined, since hitting a peak of 1,609 in October 2014, as U.S. crude futures fell from $107 a barrel mid-2014 to $26 in February.
U.S. oil futures have recouped about half of their losses when breaking above the $50-mark Thursday, and were trading around $49 when analysts predicted range bound markets for the next few months. U.S. oil executives have said that any price rise above $50 could definitely fuel a comeback for new drilling projects.
“For approximately two weeks, crude has held steady in the $45-50 range. During the first quarter earnings season, a number of exploration and production companies indicated that prices near that range could lead them to add rigs,” said energy specialists and analysts at U.S. investment bank Piper Jaffray in a note Friday. “These anecdotes lead us to believe that a modest improvement in the rig count could develop beginning in the coming weeks.” The U.S. rig count reacts to prices with a three or four month lag. Currently, crude futures are set to balance around $50 and go over $51 for the 2017 calendar year.