March 29, 2018 / 5:11 PM / a year ago

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

    March 29 (Reuters) - U.S. energy companies this week cut oil
rigs for the first time in three weeks even as crude prices
hover near three-year highs.
    Drillers cut six oil rigs in the week to March 29, bringing
the total count down to 798, General Electric Co's        Baker
Hughes energy services firm said in its closely followed report
on Thursday. RIG-OL-USA-BHI
    Baker Hughes published its North American rig count report
on Thursday, one day earlier than usual, due to the Good Friday
holiday on March 30.
    The U.S. rig count, an early indicator of future output, is
much higher than a year ago when 662 rigs were active. Energy
companies have been steadily increasing spending since mid-2016
when crude prices began recovering from a two-year crash.
    U.S. crude futures        traded around $65 a barrel this
week, approaching the three-year high of $66.66 hit in late
January, up sharply from the $50.85 average hit in 2017 and
$43.47 in 2016.
    Looking ahead, futures were trading around $63.50 for the
balance of 2018           and $59 for calendar 2019          .
    In anticipation of higher prices, U.S. financial services
firm Cowen & Co said 58 of the roughly 65 exploration and
production (E&P) companies they track have already provided
guidance indicating an 11 percent increase this year in planned
capital spending.
    Cowen said those E&Ps that have reported capital plans for
2018 expected to spend a total of $80.5 billion in 2018, up from
an estimated $72.4 billion in 2017.
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week forecast the total oil
and natural gas rig count would average 1,015 in 2018 and 1,128
in 2019, the same as last week.
    So far this year, the total number of oil and natural gas
rigs active in the United States has averaged 966, up sharply
from an average of 876 rigs in 2017 and 509 in 2016, and not far
from the total of 978 in 2015. Most rigs produce both oil and
    EIA projected this month that average annual U.S. production
will rise to a record high 10.7 million barrels per day (bpd) in
2018 and 11.3 million bpd in 2019, up from 9.3 million bpd in
    The current all-time U.S. annual output peak was in 1970 at
9.6 million bpd, according to federal energy data.

 (Reporting by Scott DiSavino
Editing by Susan Thomas)
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