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US oil rig decline smallest since December: Baker Hughes
[LONDON] The number of rigs drilling for oil in the United States declined by 12 this week to 813, the smallest decline since December, oil services firm Baker Hughes said in its closely watched survey on Friday.
That compares with declines of 41 and 56 rigs in the prior two weeks and is a sign the collapse in drilling over the past few months has slowed.
With the decline this week, the number of oil rigs has fallen for a record 16th week in a row to the lowest level since 2011, according to Baker Hughes data going back to 1987.
Despite the reduction in oil-directed rigs by about 49 per cent since hitting a record high of 1,609 in October, the more than 50 per cent decline in oil prices since the summer have forced US energy firms to slash spending and idle wells but have not yet slowed oil output.
US oil production hit 9.4 million barrels per day (bpd)last week, the highest since the early 1970s, according to the US government data, as drillers focus on their most productive acreage, become more efficient at extracting oil from existing wells and complete previously drilled wells.
US crude futures this week rebounded to over US$50 a barrel this week from a six-year low near US$42 last week on worries oil supplies from the Middle East could be disrupted due to the Saudi Arabia-led air strikes in Yemen. But by Friday, worries over Middle East disruptions eased and prices were down about 3 per cent. "At wellhead prices of US$40 a barrel or less, half of incremental production is still profitable," analysts at Bank of America Merrill Lynch said in a report.
The bank anticipates the US oil rig count will continue to decrease in the second quarter before rebounding to 943, on average, in the fourth quarter, allowing shale production to grow by 500,000 bpd this year.
For shale production to be flat in 2015 versus 2014, the BofAML analysts forecast US oil rigs would have to fall to 550 and remain there for the rest of the year.