U.S. Oil Rigs Decline by 49 to Reach Two-Year Low
http://www.bloomberg.com/news/2015-0...tml?cmpid=yhoo
U.S. drillers idled rigs seeking oil for a seventh week as production hovers near a three-decade high, contributing to a global glut that’s kept oil prices below $50 a barrel for more than two weeks.
The oil rig count dropped by 49 this week to 1,317, the lowest level in two years, Baker Hughes Inc. (BHI) said on its website Friday. Those drilling for natural gas increased by six to 316. The total slid by 43 to 1,633.
Oil rigs have dropped by 258 in seven weeks, threatening to halt the unprecedented growth in domestic oil production that has turned the U.S. into the world’s largest fuel exporter. The booming production, out of shale formations across the country, has OPEC and other foreign suppliers fighting to preserve their market share. Eight hundred rigs may be pulled out of U.S. fields during the first half of 2015, Penn West Petroleum Ltd. (PWT) Chief Executive Officer David Roberts said at a conference Thursday.
“If you go down to operating cost levels in the $30-$40 West Texas Intermediate range, and stay there, you will start to lose production in the highest cost fields in North America,” Michael Wittner, head of global oil research at Societe Generale (GLE), said Jan. 19 at a conference in Calgary. “You’re already seeing the rig counts coming down. Drilling will come down. Well completions will come down. In the end, it’s the steep decline rates that are going to do the job.”
Oil Prices
West Texas Intermediate for March delivery dropped 65 cents to $45.66 a barrel on the New York Mercantile Exchange at 1:15 p.m. East Coast time. Prices rallied briefly after news broke late Thursday that Saudi Arabia’s King Abdullah had died.
The Organization of Petroleum Exporting Countries, of which Saudi Arabia is the largest producer, has resisted calls to curb production amid an expanding surplus of global supply. Saudi Aramco will maintain its maximum sustained crude-output capacity, Chief Executive Officer Khalid Al-Falih said at the World Economic Forum in Davos, Switzerland, on Jan. 21.
The slump in oil rigs has yet to put a dent in U.S. oil production, which reached 9.19 million barrels a day in the week ended Jan. 9, the most in weekly data since at least 1983, Energy Information Administration data show. Output was virtually unchanged last week.
Drillers including Antero Resources (AR) Corp. and BHP Billiton Ltd. (BHP) joined the droves of companies curbing spending and canceling projects because of the collapse in oil prices.
BHP, the biggest overseas investor in U.S. shale, said Jan. 20 that it will cut the number of its rigs there by about 40 percent. Antero Resources said the same day that it will cut its 2015 capital budget by 41 percent.
Last week, Schlumberger Ltd. (SLB), the world’s biggest oilfield-services company, said it was cutting about 9,000 jobs and seeking to lower operating costs at a unit that helps producers find oil and natural gas.