U.S. energy firms cut the number of oil and natural gas rigs this week to a record low for a 14th week even as higher oil prices prompt some producers to start drilling again.
The U.S. rig count, an early indicator of future output, fell by four to an all-time low of 247 in the week to Aug. 7, according to data on Friday from energy services firm Baker Hughes Co going back to 1940.
That was 687 rigs, or 74%, below this time last year. The weekly rig count has dropped or held steady since March.
U.S. oil rigs fell by four to 176 this week, their lowest since July 2005, while gas rigs held steady at 69, according to Baker Hughes data.
More than half of the total U.S. oil rigs are in the Permian basin in West Texas and eastern New Mexico where units fell by three this week to a record low of 121, according to Baker Hughes data going back to 2011. Drillers also added one gas rig, bringing the total oil and gas count in the Permian to 122.
Even though U.S. oil prices are still down about 32% since the start of the year due to coronavirus demand destruction, crude futures have jumped 119% over the past four months to around $41 a barrel on Friday on hopes global economies and energy demand will snap back as governments lift lockdowns.
Analysts said higher oil prices will encourage energy firms to slow rig count reductions and start adding units later this year.
The rig count is “inching closer and closer to a bottom … but we’re not there quite yet,” analysts at Tudor, Pickering, Holt & Co said this week.