US energy firms cut oil rigs for a ninth week in a row this week, increasing the pace of reductions from recent weeks, data showed on Friday, a sign low prices continued to drive drillers away from the well pad.
Drillers removed 16 oil rigs in the week ended Oct. 30, bringing the total rig count down to 578, the least since June 2010, oil services company Baker Hughes Inc said in its closely followed report, Reuters reported.
That is about a third of the 1,582 oil rigs operating in same week a year ago. Over the last nine weeks, drillers cut 97 oil rigs.
Although US oil futures have averaged $45 a barrel so far this week, the same as last week, the December contract was on track for its first weekly gain in three weeks despite a supply glut that has tested storage capacity and hammered oil company results.
Energy traders noted the rate of oil rig reductions over the prior few weeks, about seven on average, was much lower than the 19 rigs cut on average over the past year since the number of rigs peaked at 1,609 in October 2014, due in part to expectations of slightly higher prices in the future.
With the decline in oil rigs this week, the total oil and gas rig count remained at a 13-year low despite an increase of four gas rigs, according to Baker Hughes.
The pace of those reductions, however, has picked up this week. US crude futures for next year were trading on average over $49 a barrel, according to the full year 2016 calendar on the New York Mercantile Exchange.
Higher prices encourage drillers to add rigs. The most recent time crude prices were much higher than they are now was in May and June when US futures averaged $60 a barrel.
In response to those higher prices, drillers added 47 rigs over the summer even though crude prices had declined to $47 a barrel on average by the time July and August rolled around.
