U.S. energy companies reduced the number of active oil rigs for a third week in a row, in their biggest weekly cut in five years as they slashed spending on new drilling due to a coronavirus-related slump in economic activity and fuel demand.

Drillers cut 62 oil rigs in the week to April 3, the biggest weekly drop since March 2015, bringing down the total count to 562, the lowest since March 2017, energy services firm Baker Hughes Co. said in its weekly report.

The oil rig count, an early indicator of future output, is down 32% from the same week a year ago when 831 oil rigs were active.

U.S. crude futures traded at about $27 per barrel on April 3, putting the contract on track to rise about 24% this week on rising hopes of a new deal to cut global crude supply. That would be its biggest weekly gain since January 2009.

In the spot market, oil prices plunged to about $10 per barrel, the weakest since late 1998 as demand plummeted due to the coronavirus pandemic.

Whiting Petroleum Corp. filed for Chapter 11 bankruptcy this week, making it the first publicly traded casualty of the oil price crash.

Looking ahead, U.S. crude was trading at about $31 for the balance of 2020 and $35 for calendar 2021 on expectations demand will rise in coming months after governments loosen travel and work restrictions after slowing the spread of coronavirus. That compares with an average of $57.04 in 2019.

Many E&P companies, which already planned to reduce their 2020 capex for a second year in a row, have announced plans to slash spending on new drilling even more this year.

U.S. financial services firm Cowen & Co. said 30 of the independent E&Ps it tracks have cut their spending plans since the failed OPEC+ oil production cut agreement between Russia and Saudi Arabia on March 6, implying a 38% year-over-year decline in 2020 capex.

BP Plc cut its 2020 spending plans by 25% this week and said it will reduce output from its U.S. shale oil and gas business.

Before the failure of the OPEC+ agreement, Cowen said the independent E&Ps were expected to cut spending by an average of 11% in 2020 from 2019 levels. In 2019, those companies cut spending by around 10% from 2018 levels.

Year-to-date, the total number of oil and gas rigs active in the United States has averaged 776. Most rigs produce both oil and gas.

Analysts at Raymond James, meanwhile, forecast U.S. rigs would drop from about 800 at the end of 2019 to about 400 by the middle of 2020 and just 390 at the end of the year.

Onshore