- Oil and gas rigs around the world fell 47% since February 2014
- Crude prices seen below $50 through 2018, according to Moody's
The worst crude market slump in 30 years is going to get worse before it gets better as oil explorers around the world make deeper cuts, according to the company that closely tracks drilling activity.
Baker Hughes Inc. forecast another drop of as much as 30 percent in the global rig count this year after oil and natural gas producers shut down nearly half of all rigs over the past two years to cope with a drop in prices that’s decimated cash flows.
The number of rigs drilling for oil and gas around the world has fallen 47 percent to 1,969 from 3,736 in February 2014, according to Baker Hughes, the world’s third-largest oilfield services provider. At today’s oil prices of under $35 a barrel, activity around the world will continue to fall throughout 2016, the company said Thursday in a statement.
"Our customers’ challenges of maximizing production, lowering their overall costs, and protecting cash flows are now more acute," Chief Executive Martin Craighead said in the statement, which reported a $1 billion loss for the company in the fourth quarter.
Brent crude, the global benchmark, has fallen by more than two-thirds since June 2014, forcing the industry to slash more than $100 billion in spending last year and dismiss more than 250,000 workers.
Further pain is expected as oil prices are forecast to stay "well below" $50 a barrel through 2018, Moody’s Investors Service said in a report on Tuesday. Explorers around the world are projected to cut roughly another 20 percent from their spending this year, with the sharpest drop still expected in the U.S. and Canada.
Already this week, three of the biggest producers in the U.S. have announced spending cuts of between 40 percent and 66 percent for this year as the industry talks about trying to stay within cash flow.
West Texas Intermediate, the U.S. benchmark, rose 3.2 percent to $33.32 a barrel at 12:08 p.m. in New York after an Interfax report said the Organization of Petroleum Exporting Countries and other producers will meet next month to talk about a potential output cut. Global benchmark Brent rose 3.1 percent to $34.12 in London.
Baker Hughes, which is waiting for regulatory approval to be acquired by rival Halliburton Co., rose 3.6 percent to $42.30.