Last week, the U.S. rig count was just four units above the record low of 404 set in May 2016, according to energy service provider Baker Hughes Co, which has been tracking rig counts since 1940. Its data for this week is due after 1 p.m. (1700 GMT).
Fuel demand has declined about 30% worldwide and companies are making drastic cuts to spending, laying off thousands of workers and closing production to offset a global glut. Consumption has picked up modestly in the last couple of weeks, but the overhang of supply is expected to last for months, if not years.
Drillers have cut an average of 55 rigs per week since mid March after crude prices started to plunge due to the coronavirus and a brief oil price war between Saudi Arabia and Russia. Analysts expect companies will keep pulling rigs for the rest of the year and will be hesitant to activate many new units in 2021 and 2022.
Raymond James projected the oil and gas rig count would collapse from around 800 at the end of 2019 to about 400 by the middle of the year and 200 at the end of 2020. The investment bank expects an average of just 225 operating rigs in 2021. The count in Canada already fell to a record low of just 26 rigs two weeks ago, according to Baker Hughes.
U.S. crude futures settled below $24 a barrel on Thursday, down about 60% since the start of the year as government lockdowns to stop the pandemic cut global economic growth and energy demand. Before the price collapse, it forecast a drop of 11%.
U.S. drillers expected to slash oil & gas rigs to lowest ever, Reuters, May 8