Oil rigs in the U.S. dropped to a nine-month low as producers responded to a decline in crude prices by slowing exploration.
Oil rigs fell by nine to 1,318 this week, the seventh straight decline and the lowest level since March 30, data posted on Baker Hughes Inc.’s website show. The count dropped in the fourth quarter, the second quarterly decline after 13 advances, as energy producers scaled back drilling programs on high crude supplies and lower prices.
“Around September, oil prices peaked, and now they’re way down,” James Williams, president of WTRG Economics in London, Arkansas, said by telephone. “What we’re seeing in the rig count now is a reflection of that.”
Total energy rigs declined by one to 1,762, the lowest level since March 25, 2011. Gas rigs rose by eight to 439, the field-services company based in Houston said. The gas count has shrunk to less than a third of its peak in August 2008 as companies turned away from dry-gas plays to focus on more profitable gas liquids.
Crude for February delivery on the New York Mercantile Exchange climbed 4 cents to $92.96 a barrel at 1:28 p.m. East Coast time, down 9.9 percent from a year ago. The price dipped as low as $85.21 in December after topping $100 in September.
U.S. oil output rose to the highest level since March 1993 last week. 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. Stockpiles of the feedstock slipped 3 percent to 359.9 million barrels. Supplies reached a 22-year high of 387.3 million barrels in June.
Natural gas for February delivery rose 8.4 cents to $3.282 per million British thermal units on the Nymex at 1:31 p.m. in New York. Futures are up 6.1 percent from a year ago.
“Gas revenue for producers hit the bottom in the spring, and has been more or less climbing ever since,” Williams said. “Drilling activity has had time to respond to that, so we’re getting a little bit more exploration. We’re not going to see a boom in natural gas drilling until we pass $4.”
Gas stockpiles in the U.S. fell 135 billion cubic feet last week to 3.517 trillion, exceeding the five-year average drop for the week of 111 billion, the Energy Department said.
Lynn Doan in San Francisco at +1-415-617-7168 or firstname.lastname@example.org