UPDATE 1-U.S. oil drillers cut rigs for a 6th week in 7 -Baker Hughes

Thu Dec 31, 2015 2:00pm EST
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(Adds details, context and crude oil prices)
    By Barani Krishnan
    Dec 31 (Reuters) - U.S. energy firms cut oil rigs for a
sixth week in the last seven, data showed on Thursday, a sign
drillers were still waiting for higher prices before returning
to the well pad.
    Drillers removed 2 oil rigs in the week ended Dec. 31,
bringing the total rig count down to 536, oil services company
Baker Hughes Inc said in its closely followed report.
    That decrease brought the total rig count down to about a
third of the roughly 1,500 oil rigs operating a year ago. Since
the end of the summer, drillers have cut 136 oil rigs.
    Baker Hughes issued the report a day ahead of its usual
weekly release, due to Friday's New Year holiday.
    The rig count is one of several indicators traders look to
when forecasting whether oil production will rise or fall in the
future. Other indicators include productivity gains and the
completion of previously drilled wells.
    Crude oil prices were up about 3 percent on Thursday on
short-covering and buying support in a thinly traded market
ahead of the New Year holiday.
    Global oil benchmark Brent and U.S. crude's West
Texas Intermediate (WTI) futures were both poised to end
2015 down by 30 percent or more, weighed by an unprecedented
global supply glut. 
    Higher crude prices encourage drillers to add rigs. The most
recent period that prices were much higher than now was in May
and June, when WTI averaged $60 a barrel. In response, drillers
added 47 rigs over the summer.
    The drop in oil prices since then has coincided with
declines in U.S. production.
    Federal energy data showed U.S. oil production declined for
a fourth straight month in October, slipping to 9.3 million
barrels per day from 9.4 million bpd in September. 
    Beyond the front month contract in WTI, U.S. crude futures
were trading above $40 a barrel for the rest of 2016 and closer
to $50 a barrel for 2017. That could entice some
producers to return to drilling later in 2016, traders said.

 (Reporting by Barani Krishnan; Editing by Meredith Mazzilli)