U.S. Oil Rigs Fall for First Time in Four Weeks

The number of oil rigs in the U.S. declined for the first time in four weeks as oil prices fell to their lowest level this year, according to Baker Hughes Inc. (BHI)

Oil rigs decreased by 16 to 1,371 in the seven days ended today, the Houston-based field-services company reported on its website. Gas rigs rose by two to 379, and total energy rigs declined by 13 to 1,758, the Houston-based field-services company said.

West Texas Intermediate crude settled at a four-month low of $86.68 on April 17 after the Energy Information Administration reported U.S. output climbed to a two-decade high of 7.21 million barrels. The oil rig count surged by 30 last week to the highest level since November.

“Clearly with weakening oil prices we’re not going to see a big jump in rig counts,” James Williams, president of WTRG Economics said in a phone interview from London, Arkansas. “Oil rigs had a big jump last week that was unexpected, so for them to come back down is not unexpected.”

Crude for May delivery rose 52 cents, or 0.6 percent, to $88.25 a barrel at 2:18 p.m. on the New York Mercantile Exchange, trimming the weekly decrease to 3.3 percent. Prices have retreated 3.9 percent this year and have declined 9.2 percent so far in April.

The oil rig count has risen by 44 so far this year. Williams attributed last week’s gain to a a statistical fluctuation that was corrected by this week’s decline.

Crude Supplies

Crude stockpiles dropped for the first time in four weeks last week, declining 1.23 million barrels to 387.6 million. Inventories rose earlier this month to the highest level in more than 22 years.

The U.S. gas rig count has tumbled to less than a fourth of its peak in 2008 as energy producers moved equipment out of natural-gas plays to target more profitable crude and natural- gas liquids in shale formations. The boom in tight-oil production helped the U.S. meet 84 percent of its energy needs last year, the highest level since 1991, according to the U.S. Energy Information Administration, the Energy Department’s statistical arm.

U.S. gas stockpiles rose 31 billion cubic feet to 1.704 trillion in the week ended April 12, according to EIA data, Supplies were 4.2 percent below the five-year average, compared with 3.8 percent the previous week.

Natural gas for May delivery declined 1.9 cents, or 0.4 percent, to $4.382 per million British thermal units. Futures are up 31 percent so far this year.

To contact the reporters on this story: Lynn Doan in San Francisco at ldoan6@bloomberg.net; Edward Welsch in Calgary at ewelsch1@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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