Jan 29 (Reuters) - U.S. energy firms cut oil rigs for the sixth straight week, data showed on Friday, and were expected to shed more with major U.S. shale oil companies slashing spending plans after crude prices hit 12-year lows.
Drillers removed 12 oil rigs in the week ended Jan. 29, bringing the rig count down to 498, the least since March 2010, oil services company Baker Hughes Inc said.
That compares with 1,223 rigs in same week a year ago. In 2015, drillers cut on average 18 rigs per week for a total of 963 oil rigs for the year, the biggest annual decline since at least 1988.
U.S. crude futures were around $33 a barrel on Friday and heading for a weekly gain with the front-month contract up about 25 percent over the 12-year low plumbed last week, on prospects that a deal between major exporters to cut production could help reduce one of the worst gluts in history.
Analysts forecast production will suffer as energy firms reduce capital spending plans for 2016 and cut the number of rigs drilling for oil due to the collapse in crude prices.
Three major U.S. shale oil companies this week slashed their 2016 capital spending plans more than expected in a bid to survive $30 a barrel oil prices, with Continental Resources saying prices would need to rise to $37 just to turn a profit.
Looking forward, U.S. futures were fetching $38 on average for the rest of 2016 and nearly $43 for 2017.
Capex cuts by Hess Corp, Continental and Noble Energy ranged from 40 to 66 percent, marking the second straight year of pullbacks by the trio normally seen as among the most resilient shale oil producers.
In the Permian, the nation's biggest shale oil basin located in west Texas and eastern New Mexico, Baker Hughes said drillers cut 16 rigs, the most rigs cut in a week since April 2015, to 179, the lowest number of rigs in the formation since at least 2011.
The number of active rigs in the Bakken in North Dakota also fell to its lowest level since at least 2011 with just 44 active rigs.
Baker Hughes forecast worldwide rig activity could fall by as much 30 percent in 2016 as customers continue to reduce spending in the current weak price environment.
Meanwhile, its North American revenues declined 17 percent from the prior quarter as the price collapse reduced customer demand for its rigs, among other things.
Analysts at Goldman Sachs said production in 2016 would decline by about 345,000 barrels per day (bpd) at the current rig count assuming no well deferrals, which is a bigger cut than its estimate last week for a decline of 330,000 bpd.
U.S. crude oil production averaged about 9.4 million bpd in 2015 and was forecast to average 8.7 million bpd in 2016 and 8.5 million bpd in 2017, according to the latest U.S. Energy Information Administration's Short-Term Energy Outlook.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)
Copyright 2017 Thomson Reuters. Click for Restrictions.
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you