U.S. energy firms cut the number of oil and natural gas rigs operating to a record low for an 11th week in a row though they have slowed the reductions as some consider returning to the well pad with crude prices up from historic lows.
The U.S. oil and gas rig count, an early indicator of future output, fell by five to an all-time low of 253 in the week to July 17, according to data on Friday from energy services firm Baker Hughes Co going back to 1940.
That was 701 rigs, or 73%, below this time last year.
U.S. oil rigs fell one to 180 this week, their lowest since June 2009, while gas rigs dropped by four to 71, their lowest on record according to data going back to 1987.
Even though U.S. oil prices are still down about 34% since the start of the year due to coronavirus demand destruction, U.S. crude futures have jumped 115% over the past three months to around $40 a barrel on Friday 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.
“U.S. rig activity will bottom near 250 rigs or roughly today’s levels,” analysts at Raymond James said, noting they expect the rig count to average 270 in the second half of 2020, “amounting to a small recovery as some operators slowly resume drilling in some basins.”