February 19, 2016 / 6:10 PM / 4 years ago

U.S. oil drillers cut rigs to least since Dec 2009 -Baker Hughes

Feb 19 (Reuters) - The number of oil rigs in the United fell
for a ninth straight week to the lowest level since December
2009, data showed on Friday, as energy firms continued to cut
spending amid the collapse in crude prices.
    Drillers cut 26 rigs in the week ended Feb. 19, bringing the
total rig oil count to 413, oil services company Baker Hughes
Inc said in its closely followed report.
    The number of oil rigs in operation were less than a third
of the 1,536 in service during the same week a year ago.
    Oil has shed 70 percent from highs above $100 a barrel in a
selloff that has seen little pause over the past 20 months,
forcing a collapse in the rig count as well. Since last Friday
though, some traders believed the market had seen a bottom on
talk that OPEC was on a plan to reign in production.
    This week, Saudi Arabia, the lynchpin of the Organization of
the Petroleum Exporting Countries, along with Qatar and
Venezuela, and non-OPEC member Russia, proposed to freeze output
at January's highs.
    Iran, the main stumbling block to any production control due
to its zeal to recapture market share lost to sanctions,
welcomed the plan without commitment. Iraq was also
non-committal.  
    Bank of America Merrill Lynch said in a note on Friday that
if a Saudi-Russia plan to freeze at January's highs worked and
gasoline fuel prices remained affordable, crude prices could
recover to around $47 a barrel by June. 
    On a broader scale, some analysts forecast the rig count
will decline in coming months before recovering later this year
in tandem with an expected rise in crude prices.
    Front-month U.S. West Texas Intermediate (WTI) crude futures
 were trading around $29 a barrel.
    Looking forward, crude futures were fetching about $35 for
the balance of 2016 and just around $40 for 2017
.
    U.S. shale producers, for the first time in months, were
placing new hedges to lock in 2017 prices at around $45 a
barrel, prompting price recovery at the back end of the U.S.
crude futures curve. 
    The activity reflects expectations of growing investor and
lender pressure to safeguard heavy debt requirements down the
road, as well as declining drilling costs, allowing companies to
break even at lower prices.

    
 (Reporting by Barani Krishnan; Editing by Marguerita Choy)
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