UPDATE 1-U.S. oil drillers cut rigs for 14th week in 15 - Baker Hughes

Fri Dec 11, 2015 1:40pm EST
 
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(Adds sharpest decline since Oct and price move in first paragraph, basin details, natural gas rigs)

Dec 11 (Reuters) - U.S. energy firms this week cut oil rigs for a 14th week in the last 15, data showed on Friday, in the sharpest decline since October with drillers turning away from the well pad as crude prices plunged over 10 percent over the week to near seven-year lows.

Drillers removed 21 oil rigs in the week ended Dec. 11, bringing the total rig count down to 524, the least since April 2010, oil services company Baker Hughes Inc said in its closely followed report.

That decrease brings the total rig count down to about a third of the 1,546 oil rigs operating in same week a year ago. Since the end of the summer, drillers have cut 130 oil rigs.

U.S. crude futures fell as low as $35.35 a barrel on Friday, its lowest level since February 2009, after the International Energy agency (IEA) warned global oversupply could worsen in the new year.

Energy traders noted the rate of weekly oil rig reductions since the start of September, about nine on average, was much lower than the 18 rigs cut on average since the rig count peaked at 1,609 in October 2014, due in part to expectations of slightly higher prices in the future.

U.S. crude futures for next year were trading around $42 a barrel, down from $44 last week, according to the full year 2016 calendar strip on the New York Mercantile Exchange.

Higher prices encourage drillers to add rigs. The most recent time crude prices were much higher than now was in May and June, when U.S. futures averaged $60 a barrel.

In response to those higher prices, drillers added 47 rigs over the summer.

Drillers cut rigs in three of the four major U.S. shale oil basins this week. They removed 15 rigs in the Permian in West Texas and eastern New Mexico; and two each in the Bakken in North Dakota and Montana and Niobrara in Colorado and Wyoming. The number of rigs in the Eagle Ford in South Texas by climbed three.

With a decrease of seven natural gas and 21 oil rigs this week, the total U.S. rig count fell to a fresh 16-year low. (Reporting by Scott DiSavino; Editing by Marguerita Choy)