Oil Ends Up As Rigs Fall To 2010 Levels

Baker Hughes also reported a reduction in natural gas rigs, bringing total USA rigs were to a 13-year low.

West Texas Intermediate futures bounced after news by Baker Hughes was released that said rigs that targeted oil in the USA dropped by 26 this week to 614. The number of gas rigs fell by two to 195 and miscellaneous rigs fell by one.

Oil has stayed close to the $45 per barrel rate for over four weeks after it had plunged in August to a low of six years, even as crude stockpiles in the USA stay more than 100 million barrels over the season average for the past five years and OPEC pumps above its targeted output.

The count is the lowest since August 2010; in the past four weeks drilling companies have reduced their rig count by 35.

In the week ended October 2, the number of rigs drilling for oil in the United States totaled 614, compared with 640 in the prior week and 1,591 a year ago.

Oil prices were still down on the week, though, with Brent down 1 percent and USA crude off 0.6 percent.

The data turned around oil prices that had been down about 1 percent earlier. Recently, though, the relationship between USA production and the number of active rigs has grown more complex, as drillers have managed to keep production high despite a massive falloff in the rig count.

Most of the rigs being cut lately are the less powerful ones that were quickly put back to work this summer when oil prices briefly climbed.

Last month, the U.S. Energy Information Administration said that shale production has fallen by a relatively small 350,000 barrels a day since the shale boom reached its peak in April.