March 9, 2018 / 6:08 PM / a year ago

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

    March 9 (Reuters) - U.S. energy companies this week cut oil
rigs for the first time in seven weeks even as crude prices
hovered near a three-year high, prompting more drillers to boost
spending plans for 2018.
    Drillers cut four oil rigs in the week to March 9, bringing
the total count down to 796, General Electric Co's        Baker
Hughes energy services firm said in its closely followed report
on Friday. RIG-OL-USA-BHI
    The U.S. rig count, an early indicator of future output, is
much higher than a year ago when 617 rigs were active as energy
companies have continued to boost spending since mid-2016 when
crude prices began recovering from a two-year crash.
    U.S. crude futures        traded around $62 a barrel this
week, close to levels hit in late January when prices rose to
their highest since December 2014. That compares with averages
of $50.85 in 2017 and $43.47 in 2016.
    Looking ahead, futures were trading around $61 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 58 of the roughly 65
exploration and production (E&P) companies they track have
already provided capital expenditure guidance indicating an 11
percent increase in planned spending over 2017.
    Cowen said those E&Ps that have reported spending 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, last week forecast the total oil
and natural gas rig count would average 1,015 in 2018 and 1,128
in 2019.
    So far this year, the total number of oil and natural gas
rigs active in the United States has averaged 959. That compares
with an average of 876 rigs operating in 2017, 509 in 2016 and
978 in 2015. Most rigs produce both oil and gas.
    For the year, EIA projected in March that total U.S.
production will rise to a record high 10.7 million bpd in 2018
and 11.3 million bpd in 2019, up from 9.3 million bpd in 2017.
    The current all-time U.S. output annual 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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