North American rig count has fallen to all-time lows as energy firms cut spending after the global coronavirus lockdowns caused energy prices and demand to collapse.

The U.S. rig count, an early indicator of future output, fell by 21 to a record low 318 in the week to May 22, according to data from energy services firm Baker Hughes Co. that dates back to 1940. That was a third consecutive week of record lows for the U.S. rig count.

According to Enervus, year-on-year, drillers have cut rigs by 68% in the U.S. and 73% in Canada. Analysts expect energy firms to keep chopping rigs for the rest of the year and keep the count low in 2021 and 2022.

The bleak forecast is the result of a growing oversupply of oil amid unprecedented demand destruction created by the coronavirus pandemic. E&P companies have responded to the market dynamics by announcing major curtailments despite earlier oil proration efforts made by some U.S. producers.

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