U.S. energy firms reduced the number of oil rigs operating for the second straight week as producers follow through on plans to slash spending on new drilling.
Drillers cut seven oil rigs in the week to Jan. 3, bringing the total count down to 670, energy services firm Baker Hughes Co. said in its closely followed report.
In the same week a year ago, there were 877 active rigs.
Even though the number of rigs drilling new wells has fallen in 2019, U.S. oil output has continued to increase. In part this is because the productivity of remaining rigs—the amount of oil new wells produce per rig—has increased to record levels in most big shale basins.
The pace of production growth, however, has slowed.
The U.S. Energy Information Administration projected crude output would rise to 12.3 million barrels per day (bbl/d) in 2019 and 13.2 million bbl/d in 2020 from a record 11 million bbl/d in 2018.
U.S. crude futures traded around $63 per barrel on Jan. 3, putting the contract on track to rise for the week, on fears of a conflict in the Middle East.
Looking ahead, U.S. crude futures were trading around $60 a barrel for the balance of 2020 and $55 for calendar 2021.
The number of U.S. gas rigs, meanwhile, were down by two at 123 rigs, the lowest since December 2016.
In 2019, the combined rigs active in the U.S. has averaged 943, the least since 2016 when 509 rigs were active. Most rigs produce both oil and gas.
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