U.S. energy firms cut oil rigs for a second week in three, data showed on Aug. 18, with drillers cutting spending plans in reaction to declining crude prices.
Drillers cut five oil rigs this week, bringing the total count down to 763, Baker Hughes, a GE company (NYSE: BHGE), said in its report on Aug. 18. That compares with 406 active oil rigs during the same week a year ago. Drillers have added rigs in 56 of the past 64 weeks since the start of June 2016.
The rig count is an early indicator of future output. U.S. production is expected to rise to 9.4 million barrels per day (MMbbl/d) in 2017 and a record 9.9 MMbbl/d in 2018 from 8.9 MMbbl/d in 2016, according to federal projections.
Those output gains have pressured crude prices lower in recent months, prompting several E&P companies. Those companies and others had mapped out ambitious spending programs for 2017 when they expected U.S. oil prices to be higher than the near $48.50 per barrel range where they are currently trading.
Despite recently announced spending cuts, the E&Ps still plan to spend much more this year than last year.