US oil drillers cut active rigs to lowest in 8 months

US energy firms this week cut the number of oil rigs operating to their lowest in eight months as some drillers follow through on plans to spend less on new wells this year.

Drillers cut 15 oil rigs in the week to Feb. 1, bringing the total count down to 847, the lowest since May 2018, General Electric Co's Baker Hughes energy services firm said in its closely followed report on Friday.

That was the fourth time drillers cut rigs in the past five weeks.

More than half the total US oil rigs are in the Permian where active units fell by three this week to 481, matching its lowest level since August.

The US rig count, an early indicator of future output, is still much higher than a year ago when 765 rigs were active. Energy companies boosted spending in 2018 to capture higher prices that year.

In 2019, however, some drillers have said they plan to remove rigs due in part to forecasts for lower crude prices than last year.

US crude futures were trading over $55 a barrel on Friday, near their highest in over two months on signs the United States and China could soon settle their trade dispute while producer cuts and US sanctions on Venezuelan exports tighten supplies.

Looking ahead, crude futures were trading around $56 a barrel for the balance of 2019 and calendar 2020 . EIA projected West Texas Intermediate spot crude would average $54.19 in 2019 and $60.76 in 2020, down from an average of $65.06 in 2018.

US shale producer Continental Resources said this week it expects oilfield services costs to remain low in 2019 as companies that provide drilling and completion work continue to face pressure from softer oil prices.

US crude production, meanwhile, continued to rise, hitting a new high of 11.9 million barrels per day in November, the US Energy Information Administration said this week.

Exxon Mobil Corp said on Friday its output in the Permian Basin, the largest US shale oil basin, rose 90 percent over a year ago.

US financial services firm Cowen & Co said this week that early indications from the exploration and production (E&P) companies it tracks point to a 2 percent increase in capital expenditures for drilling and completions in 2019.

In total, Cowen said those E&P companies spent about $88.7 billion in 2018.

There were 1,045 oil and natural gas rigs active in the United States this week, according to Baker Hughes. Most rigs produce both oil and gas.

Analysts at Simmons & Co, energy specialists at US investment bank Piper Jaffray, this week forecast the average combined oil and gas rig count will fall from 1,032 in 2018 to 999 in 2019 before rising to 1,087 in 2020. That forecast was the same as last week.