US oil drillers pulled rigs this week as crude traded below $60 a barrel for the seventh straight day.
Rigs targeting oil declined by 10 to a six-month low of 1,536, Baker Hughes said.
Those seeking out natural gas slipped by eight to 338, the Houston-based field services company’s website. The total count fell by 18 to 1,875, the lowest level since July.
The number of rigs targeting US oil has slid from a record 1,609 as drillers retrench in response to escalating competition from the world’s largest suppliers that’s sent international oil prices plummeting by more than $50 a barrel.
Another 800 rigs are at risk of being idled should prices remain where they are, suspending an unprecedented boom in domestic production that’s brought the nation closer to energy independence than it’s been in three decades.
The mindset of US energy explorers has “drastically changed” after the recent $15- to $20-a-barrel drop in oil prices, Tudor Pickering Holt & Co. said.
“Rigs are likely to fall out of the market at a steeper pace with drops starting to gain momentum early next year.”
Members of the Organization of Petroleum Exporting Countries, responsible for 40% of the world’s oil supply, have resisted calls to cut output since deciding on November 27 to maintain a collective target.
It would be “difficult, if not impossible” for Saudi Arabia or OPEC to give up market share by curbing production, Ali Al-Naimi, Saudi Arabia’s oil minister, said in comments published this week by the Saudi Press Agency.
Even as a worldwide surplus weighs on prices, output from US wells is poised to approach a 42-year record next year as producers take advantage of declining equipment costs and enhanced drilling techniques.
Domestic oil output climbed 19,000 barrels a day in the week ended December 12 to 9.14 million, the highest level in weekly Energy Information Administration data going back to 1983.
Production will reach 9.3 million next year as drillers pull record volumes from shale formations including North Dakota’s Bakken and Texas’s Eagle Ford, according to EIA forecasts.
Joe Mills, chief executive officer of Eagle Rock Energy Partners, said his Houston-based company may increase its rig count by two by the end of next year.
“I absolutely do not believe that we’ll be living in a $50 oil world for any length of time,” he said in an interview this week.
Other producers, including ConocoPhillips (COP) and Oasis Petroleum Inc. (OAS), have announced plans to curb spending. Chevron Corp. (CVX) and Linn Energy LLC (LINE) have put capital plans on hold.
The international benchmark North Sea Brent oil and the U.S. counterpart West Texas Intermediate crude have both dropped to their lowest levels since 2009.
WTI for January delivery rose $2.07 to $56.18 a barrel at 1:12 p.m. on the New York Mercantile Exchange, down 43% in the past year.
US gas stockpiles dropped 64 billion cubic feet last week to 3.295 trillion, according to the EIA. Supplies were 7.3% below the five-year average and 0.2 percent above year-earlier inventories.
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