U.S. energy firms this week cut oil and natural gas rigs for the first time in seven weeks even as oil prices rose to fresh seven year highs.
The U.S. oil and gas rig count, an early indicator of future output, fell by 1 to 542 in the week to Oct. 22, energy services firm Baker Hughes Co said in its closely followed report on Friday.
Despite this week’s decline, the total rig count was still up 255 rigs, or 89%, over this time last year.
U.S. oil rigs fell 2 to 443 this week, while gas rigs rose 1 to 99. That was the first decline for oil rigs and the first increase in gas rigs since early September.
U.S. crude futures this week rose to their highest since 2014 and were trading around $84 a barrel on Friday on concerns about tight supply and low stockpiles.
With oil prices up about 72% so far this year, some energy firms said they plan to boost spending in 2021 after cutting drilling and completion expenditures in 2019 and 2020.
That spending increase, however, remains small as most firms continue to focus on boosting cash flow, reducing debt and increasing shareholder returns rather than adding output.
U.S. oil production is expected to slide from 11.3 million barrels per day (bpd) in 2020 to 11.0 million bpd in 2021 before rising to 11.7 million bpd in 2022, according to government projections. That compares with the all-time annual high of 12.3 million bpd in 2019.