(Reuters) - U.S. energy firms this week reduced the number of oil rigs operating for the first time in three weeks as production growth forecasts from shale, the country’s largest oil fields, continue to shrink.
Drillers cut eight oil rigs in the week to April 18, bringing the total count down to 825, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Thursday.
Baker Hughes released the report a day early this week due to the Good Friday holiday.
The U.S. rig count, an early indicator of future output, is still a bit higher than a year ago when 820 rigs were active.
The rig count fell for the past four months and production growth in the Permian and other key shale basins have slowed as oil prices fell in the fourth quarter and many independent shale companies cut spending in the face of investor pressure to focus on earnings growth instead of increased output.
Major oil companies, like Exxon Mobil Corp and Chevron Corp, however, are boosting their presence, particularly in the Permian, the largest U.S. shale oil field.
U.S. crude oil output from seven major shale formations is expected to rise by about 80,000 barrels per day (bpd) in May to a record 8.46 million bpd, the U.S. Energy Information Administration said in its monthly drilling productivity report on Monday.
Although May’s total, if accurate, would be a record high, the increase continues a pattern of shrinking growth since February.
Since the start of the year, several independent producers have announced job cuts, including Encana Corp and Pioneer Natural Resources Co, while oilfield service company Schlumberger NV projected onshore domestic exploration and production investments will fall by 10 percent in 2019.
“Collectively, these are all signs that U.S. crude and natural gas production growth should moderate in the months ahead, following the trend of slowing rig activity that is starting to build,” said Trey Cowan, senior analyst at S&P Global Platts Analytics.
U.S. crude futures, meanwhile, traded near a five-month high of almost $65 per barrel for a second week in a row this week as a drop in crude exports from OPEC’s defacto leader Saudi Arabia and a draw in U.S. oil inventories supported prices. [O/R]
Looking ahead, crude futures were trading around $64 a barrel for the balance of 2019 and $61 in calendar 2020.
Year-to-date, the total number of oil and gas rigs active in the United States has averaged 1,039. That keeps the total count for 2019 on track to be the highest since 2014, which averaged 1,862 rigs. Most rigs produce both oil and gas.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, however, forecast the average combined oil and gas rig count will slide from 1,032 in 2018 to 1,019 in 2019 before rising to 1,097 in 2020.
That is the same as Simmons predictions last week.
Reporting by Scott DiSavino; Editing by Marguerita Choy