U.S. energy firms this week cut oil rigs for an 10th week in a row to the lowest levels since December 2009, data showed on Friday, as some producers focus more on completing their drilled but uncompleted wells instead of drilling new ones.
Looking forward, analysts forecast the rig count will bottom in a few months before recovering later this year when they expect crude prices to rise.
Drillers removed 13 oil rigs in the week ended Feb. 26, bringing the total rig count down to 400, oil services company Baker Hughes Inc said in its closely followed report.
That compares with 986 oil rigs operating in same week a year ago. In 2015, drillers cut on average 18 rigs per week for a total of 963 oil rigs for the year, the biggest annual decline since at least 1988.
Before this week, drillers had also cut on average 18 rigs per week so far this year.
U.S. crude futures were trading over $33 a barrel, putting them on track for their largest weekly gain in seven years, after supply disruptions in Iraq and Nigeria
and higher equity prices fueled by U.S. growth data.
After falling to the lowest level since 2003 earlier this month at $26.05 a barrel, U.S. futures were expected to continue climbing for the rest of the year, fetching around $38 for the balance of 2016 and $42 for 2017.
Whiting Petroleum Corp, a U.S. exploration and production company, said on its fourth quarter earnings call this week that it would consider completing some of its drilled but uncompleted wells, known in the industry as DUCs, if crude prices recover back to the $40-$45 level.
Other U.S. exploration and production companies, like Cabot Oil & Gas Corp, have also said they too will focus more on completing existing DUCs this year as they cut back on spending to drill new wells.
Analysts at Simmons & Co International, an investment banking services firm, said they expect the total U.S. oil and natural gas rig count to bottom around 400 during the second quarter before recovering later this year.
For all of 2016, Simmons expects the total U.S. land rig count to average 468, which is about half of last year's 978 average.
Analysts at Cowen and Co, a financial services firm, forecast the total onshore rig count could fall even further, bottoming between 375 and 400 later this year.
The total oil and gas rig count this week fell to 502, with 400 oil and 102 gas rigs, the lowest level since 1999, according to the Baker Hughes data.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)