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Number of US oil rigs drop again, signifying that more cutbacks could still come

Number of US oil rigs drop again, signifying that more cutbacks could still come

Current reports from Baker Hughes indicate that the number of drilling oil rigs in the US fell so much this month that analysts think the trend might lead to cutbacks again.

According to Baker Hughes in its weekly release, oil and natural gas drilling rigs dropped to 988 this week, marking the first time the numbers would drop below 1,000 since September 2009 by the firm s weekly counts.

Analysts say however that this has not affected production so much, and then the US plans to pump about 9.2 million barrels of oil per day this year alone, the highest since 1972 even though the number of rigs for drilling is the smallest in four years according to the Energy Information Administration.

According to Baker Hughes, about 760 rigs prospected for oil and 225 drilled for natural gas, while three remain as miscellaneous meaning that about 1,831 rigs had been active over the course of the past year. Meanwhile, Texas dropped 29 oil rigs, Oklahoma declined by 5, New Mexico 4, North Dakota 2, Wyoming, Ohio, and Colorado suffered one each respectively. But then, Kansas and Arkansas added one rig each, while Pennsylvania, Utah, Louisiana, Alaska, West Virginia, and California maintained their status quo.

In the face of this, economic tensions in Iran and a decline in drilling activities caused the prices of oil to shoot up on Friday and the benchmark crude for the US closed at over $50 per barrel as had never been seen since February. U.S. benchmark West Texas Intermediate crude climbed 85 cents to $51.64 Friday on the New York Mercantile Exchange, and International benchmark Brent crude rose $1.30 to $57.87 in European trading.

There are expectations of a production deceleration in the U.S. as a result of the implosion of drilling activity, said Bill Herbert, an analyst at energy investment bank Simmons & Company International.

According to Herbert, stabilizing the dollar and the euro as well as an increasing demand for oil helped the oil price to rise on Friday, and there were also some other factors that played a part in this.

Number of US oil rigs drop again, signifying that more cutbacks could still come