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U.S. oil drillers cut rigs to least in 6 years -Baker Hughes
February 12, 2016 / 6:06 PM / 2 years ago

U.S. oil drillers cut rigs to least in 6 years -Baker Hughes

Feb 12 (Reuters) - U.S. energy firms this week cut oil rigs
for an eighth week in a row to the lowest levels since January
2010, data showed on Friday, as energy firms continue to cut
spending due to the collapse in crude prices.
    Some analysts, however, forecast the rig count will decline
for a few more months before recovering later this year when
they expect crude price to rise.
    Drillers removed 28 oil rigs in the week ended Feb. 12,
bringing the total rig count down to 439, oil services company
Baker Hughes Inc said in its closely followed report.
    That compares with 1,056 oil rigs operating in same week a
year ago.
    Front-month U.S. West Texas Intermediate (WTI) crude futures
 surged more than 10 percent on Friday on prospects of a
coordinated production cut sparked by comments from the energy
minister of OPEC member United Arab Emirates. 
    Despite Friday's price, crude is poised for a weekly drop of
about 6 percent and analysts forecast the rig count will decline
for at least a few more months as companies slash spending plans
due to the 75 percent price collapse since mid-2014, before
rebounding later in the year when prices are expected to rise.
    Looking forward, U.S. crude futures were fetching around $35
for the balance of 2016 and just below $42 for 2017
.
    Based on the futures strip, analysts at Citigroup this week
forecast the oil rig count would decline to around the low 400s.
    Analysts at Raymond James, a financial service firm forecast
U.S. crude prices would average around $50 a barrel in 2016,
much higher than what the exchange was showing for forward
prices.
    "Even though we expect WTI prices to surpass $60 in the
second half of 2016 (up from less than $40 for the first half of
2016), exploration and production spending will likely lag the
surge in oil prices due to logistical and personnel
limitations," Raymond James said in a note.
    That spending lag caused Raymond James to reduce its 2016
total oil and natural gas rig count average from 620 to just
500, which is down nearly 50 percent from the 978 average rig
count in 2015.
    Looking ahead, Raymond James forecast the total U.S. oil and
gas rig count would average 1,030 rigs in 2017 and 1,358 in
2018.
    Pioneer Natural Resources Co, a U.S. shale oil
company, said it would slash the number of rigs it operates by
half to 12 in response to the collapse in crude prices.
 
    But despite the cuts to its rig count, Pioneer said it sees
output growing 10 percent this year as wells produce more than
expected.

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)

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