The U.S. oil and gas rig count, an early indicator of future output, fell by three to an all-time low of 244 in the week to Aug. 14, according to data on Friday from energy services firm Baker Hughes Co going back to 1940.
That was 691 rigs, or 74%, below this time last year.
U.S. oil rigs fell by four to 172 this week, their lowest since July 2005, while gas rigs rose by one to 70, according to data.
More than half the U.S. oil rigs are in the Permian basin in West Texas and eastern New Mexico where total units fell by five this week to a record low of 117, according to Baker Hughes data going back to 2011.
As the rig count declines, U.S. crude oil production is expected to fall by 990,000 barrels per day (bpd) this year to 11.26 million bpd, the U.S. Energy Information Administration (EIA) said on Tuesday, a steeper drop than its forecast last month for a 600,000-bpd fall.
Even though U.S. oil prices are still down about 31% since the start of the year due to coronavirus demand destruction, U.S. crude futures have jumped 123% over the past four months to around $42 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.
“It appears the industry has found a bottom over the last month, at least temporarily,” analysts at energy data provider Enverus said, noting “This level of activity is still fragile and depends on avoiding any more shocks to global demand.”