US oil & gas rig count falls for first in 10 weeks

US oil & gas rig count falls for first in 10 weeks: Baker Hughes

The US oil industry has been hit hard by the coronavirus pandemic, knocking fuel demand down by roughly 12% this year

Oil and gas is one of the main economic drivers of this area, and the industry has taken a hit after the price of oil dropped below zero earlier this week due to decline in demand. Credit: AFP Photo

US energy firms cut the number of oil and natural gas rigs operating for the first time in 10 weeks even as producers return to the wellpad with crude prices mostly trading over $40 a barrel since mid-June.

The US oil and gas rig count, an indicator of future output, fell by two to 310 in the week to November 20, according to Friday data from energy services firm Baker Hughes Co.

Even though the overall count declined, the number of operating rigs has surged since August, when it hit a record low of 244, according to Baker Hughes data going back to 1940. 

US oil rigs fell five to 231 this week, after rising last week to their highest since May, while gas rigs gained three to 76, their highest since July, according to Baker Hughes data.

The US oil industry has been hit hard by the coronavirus pandemic, knocking fuel demand down by roughly 12 per cent this year. Operators seeking to conserve costs cut drilling operations, but have lately added rigs to take advantage of lower costs for drilling crews.

"Following the dramatic shutdown of the US oilfield during the second quarter, the rig count is slowly rising as (exploration and production companies) become more comfortable with the (price) environment and seek to stabilize production," James West, senior managing director at Evercore ISI.

US shale production peaked in November 2019 at 9.2 million barrels per day, but was expected to fall to 7.5 million bpd by December, according to US Energy Department figures.

US crude traded around $42 a barrel this week on hopes of an effective coronavirus vaccine. Oil futures are up about 121 per cent over the past seven months on expectations global economies will recover in the coming months.