The relentless idling of U.S. oil and gas rigs is approaching a historical low as shale drillers struggle to stay afloat in a deepening downturn.
A price crash caused by a global oversupply of fossil fuels has caused companies to lay off workers and scrape as much spending as possible from their budgets. The number of rigs has plunged 75 percent since September 2014 and hasn’t risen for a single week since August of last year, according to Baker Hughes Inc. data updated Friday. With 489 active rigs this week, the industry is near the lowest level in records dating to 1949, set in April 1999 at 488.
“Each active rig is the result of a decision to employ capital in the industry, and the current lack of drilling indicates a strong drive to conserve cash,” Paul Hornsell, head of commodities research for Standard Chartered Bank, said in a research note this week.
West Texas Intermediate crude is down by 67 percent from the summer of 2014 and gas futures in New York are worth about a tenth of their value a decade ago. WTI has risen 36 percent since touching a 12-year low on Feb. 11 as major producing nations signal they may agree on how to address a global glut. The April contract rose 3.9 percent to $35.92 a barrel Friday.
Rigs targeting oil fell by eight to 392, led by losses in the Permian Basin, the largest U.S. shale play. Six rigs were parked there, lowering the total to 156. North Dakota’s Williston Basin lost three oil rigs to 33. Rigs seeking natural gas fell by 5 to 97, Baker Hughes said.