U.S. energy firms this week reduced the number of oil rigs operating for a fifth week in a row to the lowest since May 2017, even as crude prices jumped more than 7% this week after an attack halved output in the world’s top oil exporter Saudi Arabia.

Drillers cut 14 oil rigs in the week to Sept. 20, bringing down the total count to 719, Baker Hughes, a GE company, said in its weekly report. In the same week a year ago, there were 866 active rigs.

U.S. crude futures traded around $59 per barrel on Sept. 20, putting the contract on track for its biggest weekly gain since June due to rising Middle East tensions after the Sept. 14 attack knocked out about 5% of global supply.

Looking ahead, U.S. crude futures were trading around $59 per barrel for the balance of 2019 and $55 in calendar 2020.

The oil rig count, an early indicator of future output, has declined over a record-tying nine months as independent E&P companies cut spending on new drilling as they focus more on earnings growth instead of increased output.

Even though the number of rigs drilling new wells in U.S. shale basins has declined since the start of the year, oil output has continued to increase in part because the productivity of those rigs—the amount of oil new wells produce per rig—has increased to record levels in most basins.

U.S. oil output from seven major shale formations is expected to rise by 74,000 barrels per day (bbl/d) in October to a record high 8.843 million bbl/d, the U.S. Energy Information Administration said in its monthly drilling productivity report on Sept. 16.

U.S. financial services firm Cowen & Co. this week said that projections from the E&P companies it tracks point to a 5% decline in capex for drilling and completions in 2019 versus 2018.

Cowen said independent producers expect to spend about 11% less in 2019, while major oil companies plan to spend about 16% more.

In total, Cowen said all of the E&P companies it tracks that have reported plan to spend about $80.5 billion in 2019 versus $84.6 billion in 2018.

Year-to-date, the total number of oil and gas rigs active in the United States has averaged 988. Most rigs produce both oil and gas.

Analysts at Simmons & Co., energy specialists at U.S. investment bank Piper Jaffray, forecast the average combined oil and gas rig count will slide from a four-year high of 1,032 in 2018 to 970 in 2019 and 955 in 2020 before rising to 997 in 2021. That is the same as Simmons forecasts since late July.

 

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