U.S. rig count sees biggest drop since ’16
Decline in oil, gas facilities attributed to plunge in crude prices, shortage of pipelines in West Texas region
Drillers pulled more than 25 oil and gas rigs out of service this week, the biggest drop since the low point of the last oil bust and a sign of slowing activity in the nation’s shale fields.
The drop was the third consecutive weekly decline in the rig count, which fell to 1,050, the Houston oilfield services company Baker Hughes reported. The number of working oil rigs, down by 21 over the week, fell to 852, the lowest since May.
The declines follow the recent plunge in oil prices from a peak of about $76 a barrel in early October to a low of about $42 at the end of December, before rebounding. A shortage of pipelines in West Texas, which has made it difficult to move oil from the booming Permian Basin and forced producers to dis-
count prices, has also put a crimp in drilling.
Oil gained more than 3 percent, or $1.73 a barrel, to settle in New York at $53.80 a barrel. Prices were lifted by several developments, including early signs of a truce in the U.S.-China trade conflict, a forecast of growing global demand for crude by the International Energy Agency and the drop in the rig count. Analysts and traders have worried that a continued surge in U.S. production, now at a record 11.7 million barrels a day, would offset the output cuts recently put in place by OPEC and its allies, including Russia.
The likelihood of a slowdown in shale oil production was underscored Friday by the oilfield services company Schlumberger, the world’s largest. In an earnings call, CEO Paal Kibsgaard projected that shale output would flatten this year as the plunge in oil prices prompts exploration and production companies to curb or cut spending on drilling projects.
Of the 25 rigs pulled from service this week, 19 did horizontal drilling, which could indicate reduced fracking activity in shale plays.
Texas lost 11 rigs this week, bringing the state’s total down to 521. Texas has the most oil and gas rigs of any state. Oklahoma, which has the second most rigs in the nation, lost 10 rigs this week. Both states drove the decrease nationally.
Out of the 852 oil rigs in the U.S., well more than half of them, 481, are situated in the Permian Basin. The west Texas oil field lost seven rigs this week.
Last week, the U.S. rig count was unchanged. The oil rig count is down 47 percent from its peak of 1,609 in October 2014, before oil prices began to plummet.