January 5, 2018 / 6:04 PM / a year ago

U.S. oil drillers cut rigs for first week in three -Baker Hughes

    Jan 5 (Reuters) - U.S. energy companies this week cut oil
rigs for the first week in three even though crude prices
hovered near their highest level since the spring of 2015.
    Drillers cut 5 oil rigs in the week to Jan. 5, bringing the
total count down to 742, General Electric Co's        Baker
Hughes energy services firm said in its closely followed report
on Friday. RIG-OL-USA-BHI
    In the prior two weeks, drillers did not add or remove any
    The U.S. rig count, an early indicator of future output, is
much higher than a year ago when only 529 rigs were active.
Energy companies boosted spending plans in 2017 as crude prices
started recovering from a two-year crash.
    The increase in U.S. drilling lasted 14 months before
stalling in the second half of last year as some producers
trimmed their 2017 spending plans after prices turned softer
over the summer.
    In 2017, U.S. crude futures        averaged $50.85 a barrel,
easily topping last year's $43.47 average. This week, futures
traded over $62, their highest since May 2015.
    Looking ahead, futures were trading at $60 for the balance
of 2018           and $57 for calendar 2019          .
    In anticipation of higher prices in 2018 than 2017, U.S.
financial services firm Cowen & Co said 21 of the roughly 65
E&Ps they track have already provided capital expenditure
guidance indicating a 13 percent increase in planned spending
over 2017.
    Cowen said the E&Ps it tracks would spend about $66.1
billion on drilling and completions in the lower 48 U.S. states
in 2017, about 53 percent more than what they planned to spend
in 2016.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week slightly reduced their
forecast for the total oil and natural gas rig count to an
average of 997 in 2018 and 1,126 in 2019. Two weeks ago, it
forecast 999 in 2018 and 1,127 in 2019.
    There were 924 oil and natural gas rigs active on Jan. 5. On
average, there were 876 rigs available for service in 2017, 509
in 2016 and 978 in 2015. Most rigs produce both oil and gas.    
    Overall, U.S. production is expected to rise to 9.2 million
barrels per day in 2017 and an all-time high of 10.0 million bpd
in 2018 from 8.9 million bpd in 2016, according to a federal
energy projection in December.        
    U.S. output peaked on an annual basis at 9.6 million bpd in
1970, according to federal energy data.

 (Reporting by Scott DiSavino; Editing by Meredith Mazzilli)
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