January 19, 2018 / 6:05 PM / 7 months ago

U.S. oil drillers cut rigs for 2nd week in three -Baker Hughes

    Jan 19 (Reuters) - U.S. energy companies this week cut oil
rigs for the second time in three weeks even though crude prices
traded near their highest level since 2014.
    Drillers cut five oil rigs in the week to Jan. 19, bringing
the total count down to 747, General Electric Co's        Baker
Hughes energy services firm said in its closely followed report
on Friday. RIG-OL-USA-BHI    
    The U.S. rig count, an early indicator of future output, is
much higher than a year ago when only 551 rigs were active after
energy companies boosted spending in 2017 as crude started
recovering from a two-year price crash.
    U.S. crude futures        traded above $63 a barrel on
Friday after hitting $64.89 this week, its highest since
December 2014. That compares with averages of $50.85 in 2017 and
$43.47 in 2016.
    Looking ahead, futures were trading around $62 for the
balance of 2018           and $58 for calendar 2019          .
    In anticipation of higher prices in 2018 than 2017, U.S.
financial services firm Cowen & Co said 23 of the roughly 65
E&Ps they track, including Antero Resources Corp       , have
already provided capital expenditure guidance for 2018
indicating an 8 percent increase in planned spending over 2017.
    Cowen said the E&Ps it tracks planned to spend about $66.1
billion on drilling and completions in the lower 48 U.S. states
in 2017, about 53 percent over what they planned to spend in
2016.
    Antero said it planned to keep its drilling and completion
capital budget flat at $1.3 billion annually through 2020.
                        
    Analysts at Simmons & Co, energy specialists at U.S.
investment bank Piper Jaffray, this week slightly increased
their forecast for the total oil and natural gas rig count to an
average of 1,004 in 2018 and 1,128 in 2019. Last week, it
forecast 996 in 2018 and 1,126 in 2019.
    There were 936 oil and natural gas rigs active on Jan. 19.
On average, there were 876 rigs available for service in 2017,
509 in 2016 and 978 in 2015. Most rigs produce both oil and gas.
  
     U.S. oil output is expected to continue to rise in February
with production from shale formations rising by 111,000 barrels
per day (bpd) to 6.55 million bpd, the U.S. Energy Information
Administration said on Tuesday.             
    The global oil market has been closely watching U.S. output,
which may continue to contribute to global oversupply even as
OPEC members, Russia and other producers curb production. The
agency previously said U.S. output could reach 10 million bpd in
February and surge to 11 million bpd in 2019.        
    U.S. output peaked on an annual basis at 9.6 million bpd in
1970, according to federal energy data.
    The question of whether the shale sector can continue at
this pace remains an open debate. The rapid growth has stirred
concerns that the industry is already peaking and that
production forecasts are too optimistic.             

    
 (Reporting by Scott DiSavino; Editing by Marguerita Choy)
  
 
 
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