UPDATE 1-U.S. oil drillers cut 7 rigs as crude prices collapse -Baker Hughes

Fri Jul 17, 2015 1:52pm EDT
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(Adds reaction, price movements and rig counts in specific oil plays)

By Jarrett Renshaw

July 17 (Reuters) - The resurgence in drilling seen earlier this month seemed to fizzle this week as U.S. energy firms cut seven oil rigs, oil services company Baker Hughes Inc data showed on Friday.

The decline came as U.S. crude oil prices have fallen nearly 15 percent this month in the biggest slump since December.

That was the 30th weekly oil rig decline in the past 31 weeks, bringing the total down to 638, the lowest since the last week in June, said Baker Hughes in its closely followed report.

"The rig count is a bullish element and might help keep U.S. crude above $50 (a barrel) and we might see some short covering rallies," said Dan Flynn, analyst at Price Futures Group in Chicago.

U.S. crude futures briefly turned higher after the report then fell back to $50.47 a barrel, down 44 cents on the day, at 1:22 p.m. EDT (1722 GMT). Brent crude was down 14 cents at $56.78, having held its small gains after the report, then retreating and seesawing near unchanged.

U.S. crude futures continued to decline this week, falling about 4.2 percent as prices continued to recede from a recent high over $62 in early May.

Production declines in the largest U.S. shale plays were set to deepen in August, the Energy Information Administration said earlier this week in its drilling productivity report. While the EIA expected declines from the Bakken and Eagle Ford, it forecast production growth from the Permian month-on-month of some 5,000 barrels per day.   Continued...