US Rigs Idle for 6th Week

US Rigs Idle for 6th WeekUS Rigs Idle for 6th Week

US oil explorers idled rigs for a sixth week, as they grapple with crude near $50 a barrel.

Rigs targeting oil in the US fell by 9 to 605, adding to the 61 sidelined in the previous five weeks and extending a five-year low, Baker Hughes Inc. said on its website late on Friday. Equipment put aside in the Permian Basin in West Texas led the decline, Bloomberg reported.

"We were expecting a lot of the marginal vertical and directional rigs to start coming back out of the market, and that’s exactly what we saw this week," Matt Marietta, an analyst at Stephens Inc. in Houston, said.

"Overall this is a trend I think is going to continue into yearend."

America’s oil drillers have idled more than half the country’s rigs since last October, as the world’s largest crude suppliers battle for market share. The crude being pumped out of US shale formations helped create a global glut that has pushed prices down by more than 50% since June 2014.

However, new techniques that increased efficiency have prevented production from falling into a tailspin. US crude output rose by 76,000 barrels a day to 9.2 million last week, the biggest gain in nearly half a year, according to Energy Information Administration data. Production reached a four-decade high of 9.61 million in June. Nationwide crude stockpiles rose 3.07 million barrels to 461 million in the week ended Oct. 2, the EIA said. Supplies were forecast to have gained by 2.25 million barrels last week, according to a Bloomberg survey.

Drillers in the Permian sidelined 10 oil rigs, reducing the count there to 230, Baker Hughes said. In the Eagle Ford shale formation, the number fell by 2 to 67.