U.S. drillers cut oil & gas rigs to historic low - Baker Hughes

By Scott DiSavino (Reuters) - The number of operating oil and natural gas rigs fell to an all-time low - reflecting data going back 80 years - as the energy industry slashes output and spending to deal with the coronavirus-led crash in fuel demand.

Reuters May 09, 2020 00:07:14 IST
U.S. drillers cut oil & gas rigs to historic low - Baker Hughes

US drillers cut oil amp gas rigs to historic low  Baker Hughes

By Scott DiSavino

(Reuters) - The number of operating oil and natural gas rigs fell to an all-time low - reflecting data going back 80 years - as the energy industry slashes output and spending to deal with the coronavirus-led crash in fuel demand.

The rig count, an early indicator of future output, fell by 34 to a record low of 374 in the week to May 8, according to data on Friday from energy services firm Baker Hughes Co going back to 1940.

The prior all-time low was 404 rigs in May 2016.

Fuel demand has declined about 30% worldwide and companies are making drastic cuts to spending, laying off thousands of workers and closing production to offset a global glut. Consumption has picked up modestly in the last couple of weeks, but the overhang of supply is expected to last for months, if not years.

Drillers have cut an average of 52 rigs per week since mid March after crude prices started to plunge due to the coronavirus and a brief oil price war between Saudi Arabia and Russia.

U.S. oil rigs fell by 33 this week to 292, their lowest since September 2009, while gas rigs fell by one to 80, their lowest on record according to Baker Hughes data going back to 1987.

"The great coronavirus derigging kicked off mid to late in the first quarter, impacting well starts across the major U.S. oil shale plays," analysts at Enverus Rig Analytics said, noting the rig count was down 38% in April and 62% over the last year.

Analysts expect companies will keep pulling rigs for the rest of the year and will be hesitant to activate many new units in 2021 and 2022.

Raymond James projected the oil and gas rig count would collapse from around 800 at the end of 2019 to about 400 by the middle of the year and 200 at the end of 2020. The investment bank expects an average of just 225 operating rigs in 2021.

The count in Canada already fell to a record low of just 26 rigs two weeks ago, according to Baker Hughes.

U.S. crude futures were trading around $24 a barrel on Friday, down about 60% since the start of the year as lockdowns to stop the pandemic cut global economic growth and energy demand.

Cowen & Co said 37 of the independent exploration and production companies that the financial services firm tracks have cut spending plans since early March when crude prices started to plunge, implying a 45% decline in 2020 capex. Before the price collapse, it forecast a drop of 11%.

(Reporting by Scott DiSavino; Editing by Marguerita Choy)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.