US oil rigs decline for first time in 3 weeks

US oil rigs decline for first time in 3 weeks

Mubasher: US energy producers reduced this week the number of active US oil rigs for the first time in three weeks as output growth forecasts from shale continue to decline, Reuters reported, citing Baker Hughes report.

US drillers slashed eight oil rigs in the week ended 18 April, bringing the total count to 825, General Electric’s (GE) energy services firm reported on Thursday.

It is worth noting that the report was released a day earlier than usual this week in observance of the Good Friday holiday. Oil trading will be closed for the public holiday.

Nevertheless, the US rig count, an indicator of future production, remained a bit higher than a year ago when operating rigs totalled 820.

For the past four months, the number of rigs drilling for oil shrank, while the growth pace of output from the Permian and other major shale formations slowed down as oil prices dropped in the fourth quarter of the last year.

This came along with pressure from investors in shale companies to focus on earnings growth rather than output increase, resulting in spending cut.

The total count of oil and gas rigs averaged 1,039, sending the number for this year to the highest level since 2014, which averaged 1,862 rigs, according to Baker Hughes.

Global benchmark Brent futures settled 0.49% higher at $71.97 per barrel (pb), while US Nymex futures ended their last session at $64 pb.