U.S. energy firms this week cut oil and natural gas rigs for a 14th week in a row to the lowest level since at least 1940, data showed on Thursday, as energy firms continue to slash spending as part of the deepest energy price rout in a generation.
Oil rigs alone fell 15 to 372, the lowest level since November 2009, oil services company Baker Hughes Inc
said in its closely followed report.
Looking forward however, analysts forecast the rig count will bottom in a couple months before recovering later this year when they expect energy prices to rise.
Drillers cut 12 oil and gas rigs in the week to March 24, bringing the total rig count down to 464, the report said.
That compares with 1,048 oil and gas rigs operating in the same week a year ago. In 2015, drillers cut on average 22 oil and gas rigs per week for a total of 1,142 for the year, the biggest annual decline since at least 1988.
Before this week, drillers cut on average 20 oil and gas rigs per week for a total of 222 so far this year.
Energy firms have sharply reduced oil and gas drilling since the selloff in global crude markets began in mid-2014.
Still, many analysts think the combined rig count will rise later this year with signs that prices have bottomed after U.S. crude futures hit a 12-year low of $26 a barrel in February and U.S. gas futures fell to a near 18-year low of $1.611 per million British thermal units earlier in March.
Since hitting those lows, U.S. oil futures have soared over 50 percent to around $39 a barrel, while U.S. gas gained more than 10 percent to around $1.80 per mmBtu.
U.S. crude futures were fetching near $42 a barrel for the balance of 2016 and almost $45 for calendar 2017.
"Based on indications from exploration and production, activity can begin to increase at the $45 level. E&Ps are hedging when the 2017 strip is at or above $45," analysts at Cowen & Co, a financial services firm, said in a note this week.
With the increase in forward U.S. crude prices over the past month or so, E&P firms like Pioneer Natural Resources Co and Cimarex Energy Co have recently told analysts they were looking to boost hedging programs.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)