In the week ended April 9, US energy companies cut oil rigs for the fourth consecutive week to the lowest level since December 2016 due to the low demand which has battered oil futures.
According to energy services company Baker Hughes, US drillers cut 58 oil rigs to a total of 504. The oil rig count is down by 39% year-on-year.
The oil rigs count in the Permian basin, which makes up half of the US total, slumped by 35 to 316. It was the lowest count since March 2017 and the biggest weekly drop since February 2015.
Separately, US crude output nosedived by 600,000 bpd to 12.4 million bpd last week. The government predicted the output to fall by around 2 million bpd in 2021.
Analysts at the investment bank Raymond James predicted in the middle of 2020, the US oil and natural gas rigs count to reach a record low of about 400 and under 400 by the end of the year. The count is comparable to around 800 by the end of 2019. The current all-time low was 404 in the week to May 20, 2016.
On Thursday, US crude oil futures traded at around USD25/barrel as investors cautiously awaited the output cut negotiations between OPEC+.
According to US financial services company Cowen & Co., since the failed OPEC+ output cut agreement, 31 of the independent exploration and production (E&P) companies it tracks have slashed their spending plans.
Going forward, for the balance of 2020, the country’s crude was trading around USD33/barrel and for calendar 2021, the price went near USD37/barrel. In 2019, oil prices were at an average of USD57.04/barrel.
An independent survey views the overall spending cuts in the North American E&P companies will be around 36% or USD24.4 billion this year from the 2019 level.
