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Oil Rigs Decline in U.S., Paring 10th Annual Gain

Oil rigs in the U.S. dropped for the sixth week in a row as producers eased operations in shale formations that have pushed domestic output to a 19-year high. The decline trimmed a 10th straight annual gain.

Oil rigs fell by 13 to 1,327 this week, data posted on Baker Hughes Inc.’s website show. Texas, home to the Eagle Ford and Permian Basin plays, lost eight oil or gas rigs this week. North Dakota, where the Bakken region has driven output, was unchanged at 174 total rigs, down from the 2012 high of 203.

“We are through the growth stage in the Eagle Ford, Permian Basin and the Bakken,” said James Williams, an energy economist and president of WTRG Economics in London, Arkansas. “Now things are starting to level off.”

This week’s decline capped the second consecutive quarterly drop after 13 advances, according to data from the Houston oilfield-services company. In the fourth quarter, oil rigs fell by 83, ending 2012 with an 11 percent gain. Oil rigs have risen every year since 2002, when there were 136.

The total rig count fell a fifth straight week, by 11 to 1,763. Gas rigs rose by two to 431, the second straight gain.

“I would not doubt that last week they reclassified some rigs from oil to gas,” Williams said.

Rising Output

U.S. oil output rose to the highest level since March 1993 in the week ended Dec. 21. The surge helped the U.S. meet 83 percent of its energy needs in the first half of the year, on track to be the most since 1991.

Rig counts declined after West Texas Intermediate dropped 11 percent in the two months ended Oct. 31. Crude for February delivery on the New York Mercantile Exchange fell 7 cents today to settle at $90.80 a barrel, down 8.1 percent this year.

“Prices are fairly flat for oil right now,” Williams said. “Typically, you see the rig count drop two to three months after the price gets lower.”

The natural gas rig count has shrunk to less than a third of its peak in August 2008 because of a switch from dry gas to more profitable crude and natural gas liquids drilling.

Natural gas for February delivery rose 5.7 cents, or 1.7 percent, to $3.469 per million British thermal units on the Nymex. The price is up 16 percent in 2012.

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