U.S. energy firms cut the number of oil and natural gas rigs operating to a record low for a ninth week in a row although the reductions have slowed as higher oil prices prompt some producers to start drilling again.
The U.S. oil and gas rig count, an early indicator of future output, fell by two to an all-time low of 263 in the week to July 2, according to data on Thursday from energy services firm Baker Hughes Co going back to 1940.
That was 700 rigs, or 73%, below this time last year.
Baker Hughes released the rig count a day early on Thursday because the markets are closed a day ahead of the U.S. Fourth of July holiday which falls on a Saturday.
U.S. oil rigs fell by three to 185 this week, their lowest since June 2009, while gas rigs rose one to 76.
Even though prices are still down about 34% since the start of the year due to coronavirus demand destruction, U.S. crude futures have jumped 200% over the past ten weeks to around $40 a barrel on Thursday on hopes global economies will snap back as governments lift lockdowns.
Analysts said higher oil prices will encourage energy firms to slow rig count reductions and possibly start adding some units later this year.
Financial services firm Cowen & Co said the 45 independent exploration and production companies it tracks plan to slash spending by about 48% in 2020 versus 2019. That follows a capex reduction of roughly 9% in 2019 and an increase of around 23% in 2018.