April 19 (Bloomberg) -- The number of oil rigs in the U.S. declined for the first time in four weeks as prices fell to their lowest level this year, according to Baker Hughes Inc.
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 settled up 28 cents, or 0.3 percent, at $88.01 a barrel on the New York Mercantile Exchange. Prices have retreated 4.1 percent this year and have declined 9.5 percent so far in April.
The oil rig count has risen by 44 this year. Williams attributed last week’s gain to a a statistical fluctuation that was corrected by this week’s drop.
Baker Hughes forecast an improvement in the North American rig market this year, according to the company’s first-quarter earnings release today.
“Following five consecutive quarters of declines in the U.S. rig count, we are now forecasting a modest increase for the remainder of the year,” Chief Executive Officer Martin Craighead said in the company’s first-quarter earnings release today.
The average U.S. rig count will be down 6 percent this year, though the total well count will remain flat at roughly 35,000 because of improvements in drilling efficiency, Craighead said today on a conference call with analysts and investors.
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. EIA, 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 rose 0.7 cent, or 0.2 percent, to settle at $4.408 per million British thermal units on the Nymex. Futures are up 32 percent this year.
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