The U.S. oil rig count fell for a fourth time in the last five weeks as a 14-month drilling recovery stalled as energy firms reduced spending plans in response to recent crude price declines.The oil rig count fell by two to 748 in the week to Oct. 6, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.
The rig count, an early indicator of future output, is much higher than a year ago when only 428 rigs were active after energy companies boosted spending plans earlier in the year in anticipation of higher crude prices in coming months.
U.S. crude futures have averaged more than $49 a barrel so far in 2017, easily topping last year’s $43.47 average. Looking ahead, futures were trading around $49 for the balance of the year and $50 for calendar 2018 .
Some exploration and production (E&P) companies have trimmed their 2017 investment plans over the past few months due to recent declines in crude futures, but they still plan to spend more this year than in 2016.
Crude prices fell in six of the first nine months of 2017 as rising U.S. output helped add to a global glut and were on track to decline about 5 percent in October.
Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week revised downward their forecast for the total oil and natural gas rig count, now expecting it to average 881 in 2017, 960 in 2018 and 1,116 in 2019. Last week, it forecast 973 in 2017, 1,004 in 2018 and 1,084 in 2019.
That compares with 863 oil and gas rigs so far in 2017, 509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
Analysts at U.S. financial services firm Cowen & Co’s capital expenditure tracking was unchanged this week, showing the 64 E&Ps it tracks planned to increase spending by an average of 49 percent in 2017 from 2016.
That expected 2017 spending increase followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said.