Drillers cut 10 oil rigs in the week to Nov. 15, bringing the total count down to 674, the lowest since April 2017, energy services firm Baker Hughes Co said in its closely followed report on Friday.
In the same week a year ago, there were 888 active rigs.
Producers expect to spend about $4 billion less in 2019 than in 2018, according to U.S. financial services firm Cowen & Co, as independent exploration and production companies cut spending on new drilling as shareholders seek better returns in a low energy price environment.
So far, 21 exploration and production companies tracked by Cowen have released 2020 capex guidance with 15 projecting declines, five with increases and one unchanged, for a 13% year-over-year spending decline.
The oil rig count, an early indicator of future output, has already declined for a record 11 months in a row, but output has continued to increase in part because productivity of those remaining rigs – the amount of oil new wells produce per rig – has increased to record levels in most shale basins.
The U.S. Energy Information Administration projected U.S. crude output will rise to 12.3 million barrels per day (bpd) in 2019 from a record 11.0 million bpd in 2018.
U.S. crude futures traded below $58 per barrel on Friday, putting the contract on track to rise for a second week as the U.S. and China make progress on trade talks that could boost global economic growth and oil demand.
Looking ahead, U.S. crude futures were trading around $56 a barrel in calendar 2020 and $53 in calendar 2021 .
Year-to-date, the total number of oil and gas rigs active in the United States has averaged 961. Most rigs produce both oil and gas.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, forecast the annual average combined oil and gas rig count will slide from a four-year high of 1,032 in 2018 to 951 in 2019 and 906 in 2020 before rising to 957 in 2021.
That is the same as Simmons forecasts since late September.