U.S. energy firms cut the number of oil and natural gas rigs operating to a record low for a sixth week in a row even as oil prices rebound from historic lows and some producers return to the wellhead.
The U.S. oil and gas rig count, an early indicator of future output, fell by five to an all-time low of 279 in the week to June 12, according to data from energy services firm Baker Hughes Co going back to 1940.
That was 690 rigs, or 71%, below this time last year.
U.S. oil rigs fell seven to 199 this week, their lowest since June 2009, while gas rigs rose two to 78.
“Rig activity may continue to decline for a few weeks but the recent recovery in oil prices if sustained should lead to a reversal near the end of the month,” said James Williams of WTRG Economics in Arkansas, noting “Natural gas drilling may start to recover before oil.”
After rising over 130% over the prior six weeks, U.S. crude futures were trading around $36 a barrel on Friday, putting the contract down about 10% this week and down around 40% since the start of the year.
Analysts said they expect U.S. energy firms to continue chopping rigs as they cut spending for the rest of the year and keep the count low in 2021 and 2022.
U.S. crude output is forecast to drop to 11.6 million barrels per day (bpd) in 2020 and 10.8 million bpd in 2021 from a 12.2 million bpd in 2019, the U.S. Energy Information Administration (EIA) said in its latest outlook.