- Big three U.S. plays dropped almost 100 horizontal oil rigs
- Permian led the weekly declines after letting go of 8 oil rigs
Explorers idled more drilling rigs in U.S. oilfields this week as record supplies begin to make crude prices in the teens a real possibility.
Rigs targeting oil in the U.S. fell by 28 to 439, after more than 1,000 were idled over the past year and a half, Baker Hughes Inc. said on its website Friday. The report marks eight straight weeks of declines in the number of working rigs. Natural gas rigs were trimmed by 2 to 102, bringing the total down by 30 to 541. Since October, the big three U.S. onshore plays -- the Eagle Ford in south Texas, the Permian Basin in west Texas and the Bakken in North Dakota -- have combined to drop almost 100 oil rigs that can drill horizontally underground, according to Suntrust Robinson Humphrey.
"Those are the basins where you need to see horizontal oil rigs come down," Chase Mulvehill, an analyst at Suntrust in Atlanta, said Friday in a phone interview. "We see a few more weeks of declines like this, and investors will start looking through the downturn and possibly saying bad news is now good news."
Supplies at Cushing, Oklahoma, the biggest U.S. oil-storage hub, rose to a record 64.7 million barrels last week, according to government data. The site is considered full at 73 million barrels. Oil in New York rose 11 percent to $29.11 a barrel at 2:25 p.m.
"Oil has become so disconnected to the cost of getting it from the ground that now we’re trading on round numbers," said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. "The next target is $25 and then we’ll head to $20. Oil in the teens is a real prospect in the near future."
America’s oil drillers have been idling rigs since October 2014 as the world’s largest crude suppliers battle for market share. Despite the cutbacks, U.S. production has remained stubbornly high as new techniques that increase efficiency keep the oil flowing.
U.S. production fell by 28,000 barrels last week to 9.19 million barrels a day, according to weekly Energy Information Administration data. It was the first time since early September that U.S. output declined for three weeks in a row.
The Permian Basin led the weekly cutbacks, dropping eight oil rigs and leaving 169 working.