U.S. oil drillers cut rigs for a second week since January as crude prices have declined in recent months despite an OPEC-led effort to cut production and end a multi-year glut.
Analysts, however, noted weekly declines in the rig count were likely just a brief pause in a drilling recovery expected to continue through at least 2019.
Drillers cut 1 oil rig in the week to July 21, bringing the total count down to 764, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
That compares with 371 active oil rigs during the same week a year ago. Drillers have added rigs in 54 of the past 60 weeks since the start of June 2016.
The rate of those additions, however, has slowed over the past few months with declining oil prices. Rig additions over the past four weeks averaged 2, its lowest since June 2016.
U.S. crude futures were down almost 2 percent this week to under $46 a barrel on Friday after Petro-Logistics forecast OPEC production would rise in July.
Lingering worries about global oversupply have knocked around 15 percent off U.S. crude futures so far this year, despite a deal involving the Organization of the Petroleum Exporting Countries and other major producers to curb output by about 1.8 million barrels per day (bpd) from the start of 2017 through the end of March 2018.
Analysts said those OPEC-led efforts have been frustrated by increased drilling activity and rising output from U.S. shale drillers and other producers hoping to capture higher crude prices in future months.
U.S. shale oil production is forecast to rise for an eighth straight month, climbing 112,000 barrels per day (bpd) to 5.6 million bpd in August, the U.S. Energy Department said on Monday.
Futures for the balance of 2017 were trading around $46 a barrel, while calendar 2018 was fetching about $47 a barrel.
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 892 in 2017, 998 in 2018 and 1,107 in 2019. Most wells produce both oil and gas.
That compares with 833 so far in 2017, 509 in 2016 and 978 in 2015. If correct, Simmons’ 2019 rig forecast would be the most since 2014 when there were 1,862 active rigs. The rig count peaked in 2012 at 1,919, according to Baker Hughes.
The rig count is an early indicator of future output. U.S. producers are expected to boost output to 9.3 million bpd in 2017 and a record 9.9 million bpd in 2018 from 8.9 million bpd in 2016, according to federal projections.
(Reporting by Scott DiSavino; Editing by Meredith Mazzilli)