UPDATE 1-U.S. oil drillers cut rigs for 7th week to Oct 2009 lows -Baker Hughes

Fri May 6, 2016 1:42pm EDT
 
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(Adds rig increase in Permian basin in paragraph 11, updates
total land rig number in paragraph 12)
    May 6 (Reuters) - U.S. oil drillers cut rigs for a seventh
week in a row to the lowest level since October 2009, oil
services company Baker Hughes Inc said Friday, although
as analysts see an end to the nearly two-year slump in drilling
for new wells.
    Drillers cut four oil rigs in the week to May 6, bringing
the total rig count down to 328, that compares with the 668 rigs
operating a year ago, Baker Hughes said in its closely followed
report. RIG-OL-USA-BHI
    In 2015, drillers cut on average 18 oil rigs per week for a
total of 963 for the year, the biggest annual decline since at
least 1988 amid the biggest rout in crude prices in a
generation.
    Before this week, drillers cut on average 12 oil rigs per
week for a total of 204 so far this year.     
    The U.S. rig count may finally be bottoming out as companies
look for oil prices to rally just a bit more, a signal that the
time has come to deploy more capital and get production moving
again, analysts say. 
    Energy firms have sharply reduced oil and gas drilling since
the collapse in crude markets began in mid-2014 when U.S. crude
futures fell from over $107 a barrel to hit a near
13-year low at around $26 in February.
    After climbing to a six-month high around $47 last week,
U.S. crude futures this week were heading for their first weekly
loss in four weeks, trading around $45 as investors cash in on
the prior month's gains. 
    U.S. crude futures were fetching about $46 for the balance
of 2016 and about $48 for calendar 2017.
    With prices expected to rise in the future, at least one
company announced plans to return to the pad as soon as this
month. 
    Concho Resources Inc this week said will add two
rigs in the Midland Basin in West Texas in May. Analysts at
Cowen & Co said in a note that Concho planned to add two more
rigs in June.
    In the Permian basin in West Texas and eastern New Mexico,
drillers this week added five oil rigs, the first weekly
increase so far this year.
    Cowen said it expect U.S. oil and gas land rigs to bottom
near current levels between 375 and 400 sometime in the second
quarter before increasing in the fourth quarter. The total land
rig count fell by three this week to 388, according to Baker
Hughes.
    The service companies like Baker Hughes and Halliburton Co
, however, are still cutting costs to right-size their
businesses after crude suffered its biggest price rout in a
generation. 

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)