U.S. energy firms cut seven oil rigs this week after adding rigs for the last two weeks as U.S. crude prices fell nearly 15 percent this month in the biggest slump since December, data showed on Friday, a sign some drillers were waiting for higher prices before returning to the well pad.
That was the 30th weekly oil rig decline in the past 31 weeks, bringing the total down to 638, the lowest since the last week in June, oil services company Baker Hughes Inc said in its closely followed report.
U.S. crude oil futures continued to decline this week, falling about 4.2 percent as prices continued to recede from a recent high over $62 in early May.
Production declines in the largest U.S. shale plays were set to deepen in August, the U.S. Energy Information Administration said earlier this week in its drilling productivity report. While the EIA expected declines from the Bakken and Eagle Ford, the agency forecasted production growth from the Permian month or month of some 5,000 barrels per day.
The increase in rig counts comes as Iran has started to ship oil to Asia that it had been storing offshore for months after Tehran and other world powers reached an agreement about the nation’s nuclear program, clearing the way for an easing of international sanctions. [ID: nL5N0ZW4GC]
There is a sense that the declines in rigs have bottomed out and that companies will return to the oil patch. But Phil Flynn, an analyst at Price Futures Group, cautioned that it is going take years to get near the record highs of the early boom.
“With rig counts lower, we are going to test $50, but I suspect we’ll snap back shortly,” Flynn said.
Front-month U.S. crude oil futures on the New York Mercantile Exchange were a shade lower at $50.83 at 1:08 p.m. EDT (1708 GMT) on Friday.
WPX Energy Inc said on Tuesday that it plans to increase the rig count on its Permian assets from four to six by year end. The oil producer earlier said it would add two rigs in North Dakota this year and target a 20 percent boost in output by 2016.
Starting in July, Pioneer said it would add an average of two horizontal rigs per month through 2015 in the Permian Basin and another eight horizontal rigs in the Permian and Eagle Ford during the first quarter of 2016. [ID: nL1N0YN1XB]
(Reporting by Jarrett Renshaw; Editing by Marguerita Choy)
This article was from Reuters and was legally licensed through the NewsCred publisher network.