May 20, 2016 / 6:12 PM / 2 years ago

U.S. oil rig count steady for first this time this year -Baker Hughes

By Scott DiSavino
    May 20 (Reuters) - U.S. energy firms this week kept the
number of rigs drilling for oil unchanged for the first time
this year, services company Baker Hughes Inc said on
Friday, as crude futures trade near a seven-month high.
    Drillers kept the number of rigs at 318 in the week to May
20, holding at the lowest level since October 2009, Baker Hughes
said in its closely followed report. RIG-OL-USA-BHI
    Prior to this week, drillers added only one rig so far this
year during the week of March 18. On average, they cut 11 oil
rigs per week for a total of 218 so far this year.
    The number of U.S. oil rigs currently operating compares
with the 659 rigs operating in the same week a year ago. 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.
    Energy firms have sharply reduced oil and gas drilling since
the collapse in crude markets began in mid-2014 as U.S. crude
futures fell from over $107 a barrel to a near 13-year
low around $26 in February.
    But with U.S. crude futures settling over $48 a barrel much
of the week on production worries in Nigeria and Venezuela, most
analysts expect the number of rigs to stop falling soon before
edging up later this year with prices expected to rise in coming
    U.S. crude futures were fetching over $49 for the balance of
2016 and under $51 for calendar 2017.
    U.S. investment banking advisory Evercore ISI said it
expects drilling to pick up in the next quarter based in part on
the number of drilling permits.
    U.S. land permits totaled 2,099 in April, up a solid 15
percent from March, but down 33 percent year-on-year, Evercore
    "We still expect permitting to show favorable month-on-month
growth in states like Texas and New Mexico, as the Permian and
Eagle Ford will likely be the first-move shale plays for
producers looking to put rigs back to work in 2017," Evercore
    Evercore expects to exit the second quarter with about 376
total rigs. After that the third quarter will average 401 rigs,
implying a three rig increase per week starting in July. Baker
Hughes said there were 406 total rigs in the week ended May 13.

 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
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