US oil rig count falls to lowest since December 2011

The number of rigs drilling for oil in the United States fell by 83 this week to 1,140 - the lowest since December 2011 - a survey showed on Friday, a clear sign of the pressure that tumbling crude prices have put on oil producers. That was a ninth straight week of declines, oil services firm Baker Hughes Inc said in its widely followed report.
Unlike last Friday, when US oil futures jumped higher in the hour after the Baker Hughes report, ending up over 8 percent on the day, there was a more muted reaction this week with US crude holding earlier gains of about 2 percent at $51.50 per barrel. The rig count is down 29 percent from its October peak, although many analysts expect further reductions as firms slash spending plans.
"The count is continuing to fall in direct relation to exploration and production companies' reevaluation of the economics and capex budgets," said Kyle Cooper at IAF Advisors, a consultancy in Houston. The number of oil rigs has fallen in 14 of the last 17 weeks since hitting a record high of 1,609 in mid-October. "The drop was consistent with the recent velocity of rig count declines and is about in line with our expectations," said James West, an analyst at Evercore ISI.
Since June, global crude benchmarks have had a seven-month slump that slashed prices by nearly 60 percent on a combination of over supplied markets and lackluster demand. Meanwhile, production has slipped slightly from record highs, falling 36,000 barrels per day to 9.2 million bpd last week, according to government data. Texas, the state with the most rigs, again lost the most this week, shedding 41 to 654, the lowest since 2010, Baker Hughes said. That is down from a reduction of 58 rigs last week.
The shale play with the biggest losses was Permian in West Texas and New Mexico, the nation's biggest and fastest growing shale oil play. The Permian lost 37 oil rigs, the biggest weekly decline in data going back to 2011, to 413 rigs, the least since 2011. The count of horizontal rigs, which are most often used to extract oil from shale rock, fell for a 11th straight week, by 80, the biggest weekly loss in data going back to 1991, to 1,088, the least since September 2013.