U.S. energy firms this week cut the number of oil rigs operating for a third week in a row to the lowest level in 10 months as independent producers follow through on plans to cut spending even though oil majors plan to spend more.

Drillers cut nine oil rigs in the week to March 8, bringing the total count down to 834, the lowest since May, Baker Hughes, a GE company, said in its weekly report.

The U.S. rig count, an early indicator of future output, is higher than a year ago when 796 rigs were active after energy companies boosted spending in 2018 to capture higher prices that year.

Drilling has slowed with the rig count contracting in the past three months as independent E&P companies cut spending as they focus on earnings growth instead of increased output with crude prices projected to decline this year versus 2018.

“In light of many operators guiding their 2019 capital spending budgets lower than what they did last year, there is a risk that the modest decline in rig activity could swell to a double-digit deceleration,” S&P Global Platts Senior Analyst Trey Cowan said.

International oil companies, however, have said they plan to boost spending this year.

Chevron Corp. and Exxon Mobil Corp. this week released dueling projections to boost output in the Permian Basin that, if realized, would cement the rivals as the dominant players in the West Texas and New Mexico field.

U.S. financial services firm Cowen & Co. said this week that projections from the E&P companies it tracks point to a percentage decline in the mid-single digits in capital expenditures for drilling and completions in 2019 versus 2018.

Cowen said independents expect to spend about 12% less in 2019, while international oil companies plan to spend 16% more.

In total, Cowen said all of the E&P companies it tracks spent about $92.8 billion in 2018.

U.S. crude futures were trading at about $55 per barrel on March 8, putting the front-month on track to fall for a second week in a row for the first time this year as economic worries in Europe and the United States stoked oil demand concerns.

Despite recent declines, however, oil prices were still up over 20% so far this year after OPEC and its allies began to cut output in January.

Analysts, however, were pessimistic over the prospects for a significant price rally in 2019, as booming U.S. shale output threatens to offset the OPEC cuts.

U.S. weekly crude production held at a record 12.1 million barrels per day for a second week in a row last week, according to the U.S. Energy Information Administration.

Looking ahead, crude futures were trading above $56 per barrel for the balance of 2019 and calendar 2020.

There were 1,027 oil and natural gas rigs active in the United States this week, according to Baker Hughes. Most rigs produce both oil and gas.

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