January 29, 2016 / 6:08 PM / 2 years ago

U.S. oil drillers cut rigs for sixth straight week -Baker Hughes

Jan 29 (Reuters) - U.S. energy firms cut oil rigs for the
sixth straight week, data showed on Friday, and were expected to
shed more in coming weeks with three major U.S. shale oil
companies slashing their spending plans after crude prices hit
12-year lows.
    Drillers removed 12 oil rigs in the week ended Jan. 29,
bringing the rig count down to 498, the least since March 2010,
oil services company Baker Hughes Inc said in its
closely followed report.
    That compares with 1,223 oil rigs in same week a year ago.
In 2015, drillers cut on average 18 rigs per week for a total of
963 oil rigs for the year, the biggest annual decline since at
least 1988.
    U.S. crude futures were trading around $33 a barrel
on Friday, heading for a weekly gain with the front-month
contract up about 25 percent over the 12-year low plumbed last
week, on prospects that a deal between major exporters to cut
production could help reduce one of the worst gluts in history.
    Analysts forecast production will suffer as energy firms
reduce capital spending plans for 2016 and cut the number of
rigs drilling for oil due to the collapse in crude prices.
    Three major U.S. shale oil companies this week slashed their
2016 capital spending plans more than expected in a bid to
survive $30 a barrel oil prices, with one of them, Continental
Resources, saying prices would need to rise to $37 just
to turn a profit. 
    Looking forward, U.S. futures were fetching $38 on average
for the rest of 2016 and nearly $43 for 2017
    The capex cuts by Hess Corp, Continental and Noble
Energy ranged from 40 percent to 66 percent, marking the
second straight year of pullbacks by a trio of companies
normally seen as among the most resilient shale oil producers.
    Baker Hughes, meanwhile, said this week that its North
American revenues declined 17 percent compared with the prior
quarter as the collapse in crude prices reduced customer demand
for its rigs, among other things. 
    Baker Hughes forecast worldwide rig activity could fall by
as much 30 percent in 2016 as customers continue to reduce
spending in the current weak price environment. 
    Analysts at Goldman Sachs said production in 2016 would
decline by about 345,000 barrels per day (bpd) at the current
rig count assuming no well deferrals, which is a bigger cut than
its estimate last week for a decline of 330,000 bpd.
    U.S. crude oil production averaged about 9.4 million bpd in
2015 and was forecast to average 8.7 million bpd in 2016 and 8.5
million bpd in 2017, according to the latest U.S. Energy
Information Administration's Short-Term Energy Outlook.

 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
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