U.S. oil drillers cut rigs for seventh week in eight - Baker Hughes

Jan 8 (Reuters) - U.S. energy firms this week cut oil rigs
for a seventh week in eight, data showed on Friday, increasing
the rate of declines as crude prices tumbled to near 12-year
lows after one of the worst years in almost 30 years for the rig
market.
Drillers removed 20 oil rigs in the week ended Jan. 8,
bringing the total rig count down to 516, the least since April
2010, oil services company Baker Hughes Inc BHI.N said in its
closely followed report.
That decrease brings the total rig count down to about a
third of the 1,421 oil rigs operating in same week a year ago.
In 2015, Baker Hughes said drillers idled a total of 963 oil
rigs, the first annual cut since 2002 and the biggest cut in a
year since at least 1988. Over the prior five years (2010-2014),
producers added on average 216 oil rigs per year.
Crude futures were trading near 12-year lows on persistent
global oversupply worries and a bleak demand outlook. O/R
U.S. crude futures CLc1 were trading around $33 a barrel
on Friday, putting the contract on track to lose about 10
percent this week after crude stocks at Cushing, the U.S.
storage hub in Oklahoma, climbed to record highs this week due
to over production and weak heating demand during earlier in the
winter.
Last week, U.S. crude averaged $37 a barrel.
U.S. crude futures were trading around $38 a barrel for the
rest of 2016 and $43 for 2017 CLYstc1 , which some analysts
have said could entice producers to return to drilling later
this year.
One of the biggest U.S. independent drillers Pioneer Natural
Resources Co PXC.N said this week its preliminary 2016
production growth forecast was 10 percent to 15 percent compared
with 2015.
Pioneer said it continues to forecast compound annual
production growth of 15 plus percent over the 2016 through 2018
period, assuming the addition of two rigs to three rigs per year
during 2017 and 2018.
The last time drillers returned to the well pad en masse was
in May and June, when U.S. futures averaged $60 a barrel. In
response to those higher prices, drillers added 47 rigs last
summer.
The rig count is one of several indicators traders look to
when forecasting whether production will rise or fall in the
future. Other indicators include productivity gains and the
completion of previously drilled wells.