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 s
aid 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 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)