U.S. oil drillers cut rigs for seventh week in eight - Baker Hughes
Jan 8 (Reuters) - U.S. energy firms this week cut oil rigs for a seventh week in eight, data showed on Friday, increasing the rate of declines as crude prices tumbled to near 12-year lows after one of the worst years in almost 30 years for the rig market. Drillers removed 20 oil rigs in the week ended Jan. 8, bringing the total rig count down to 516, 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 1,421 oil rigs operating in same week a year ago. In 2015, Baker Hughes said drillers idled a total of 963 oil rigs, the first annual cut since 2002 and the biggest cut in a year since at least 1988. Over the prior five years (2010-2014), producers added on average 216 oil rigs per year. Crude futures were trading near 12-year lows on persistent global oversupply worries and a bleak demand outlook. U.S. crude futures were trading around $33 a barrel on Friday, putting the contract on track to lose about 10 percent this week after crude stocks at Cushing, the U.S. storage hub in Oklahoma, climbed to record highs this week due to over production and weak heating demand during earlier in the winter. Last week, U.S. crude averaged $37 a barrel. U.S. crude futures were trading around $38 a barrel for the rest of 2016 and $43 for 2017, which some analysts have said could entice producers to return to drilling later this year. One of the biggest U.S. independent drillers Pioneer Natural Resources Co said this week its preliminary 2016 production growth forecast was 10 percent to 15 percent compared with 2015. Pioneer said it continues to forecast compound annual production growth of 15 plus percent over the 2016 through 2018 period, assuming the addition of two rigs to three rigs per year during 2017 and 2018. The last time drillers returned to the well pad en masse was in May and June, when U.S. futures averaged $60 a barrel. In response to those higher prices, drillers added 47 rigs last summer. The rig count is one of several indicators traders look to when forecasting whether production will rise or fall in the future. Other indicators include productivity gains and the completion of previously drilled wells. (Reporting by Scott DiSavino; Editing by Marguerita Choy)
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