September 8, 2017 / 5:09 PM / 10 months ago

U.S. oil drillers cut rigs for 3rd week in four as recovery stalls -Baker Hughes

    Sept 8 (Reuters) - U.S. energy firms cut oil rigs for a
third time in the past four weeks as a 14-month drilling
recovery stalls with energy firms reducing spending plans in
response to recent crude price declines.
    Drillers cut three oil rigs in the week to Sept. 8, bringing
the total count down to 756, the least since June, General
Electric Co's        Baker Hughes energy services firm said in
its closely followed report on Friday. RIG-OL-USA-BHI
    That compares with 414 active oil rigs during the same week
a year ago. 
    Drillers cut seven rigs in August, the first monthly
reduction since May 2016. 
    The rig count is an early indicator of future output.
    The declining rig count comes amid a hive of tropical
storms, including Hurricane Harvey that hit in late August,
curtailing oil drilling activity in the U.S. Gulf and in Texas'
Eagle Ford shale plays.              
    The recovery in U.S. demand as Gulf Coast refineries restart
after Harvey supported U.S. crude prices        this week, which
were trading up 1.7 percent on the week at just above $48 per
    Crude prices were up about 2 percent so far this month after
declining in five of the past six months, including a near 6
percent drop in August.
    U.S. production is expected to rise to 9.4 million barrels
per day (bpd) in 2017 and a record 9.9 million bpd in 2018 from
8.9 million bpd in 2016, according to federal energy
    Those output gains have pressured crude prices lower in
recent months, prompting several exploration and production
(E&P) companies to reduce spending plans for this year,
including Bill Barrett Corp        .            
    Those companies and others had mapped out ambitious spending
programs for 2017 when they expected U.S. oil prices to be
higher than the $48 per barrel range where they are currently
    Despite recently announced spending cuts, the E&Ps, however,
still plan to spend much more this year than last year.
    Analysts at U.S. financial services firm Cowen & Co said in
a note this week that its capital expenditure tracking showed
the 64 E&Ps it tracks planned to increase spending by an average
of 49 percent in 2017 from 2016.
    That expected 2017 spending increase followed an estimated
48 percent decline in 2016 and a 34 percent decline in 2015,
Cowen said.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, forecast the total oil and gas
rig count would rise to an average of 863 in 2017, 932 in 2018
and 1,078 in 2019. Most wells produce both oil and gas.
    That compares with 855 so far in 2017, 509 in 2016 and 978
in 2015.

 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
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