Oil explorers settled into the deepest drilling hibernation in more than a year as the U.S. shale patch struggles to maintain its explosive growth.
Working oil rigs fell by one this week to 833, according to data released Friday by oilfield-services provider Baker Hughes. The four-week decline is the longest since May 2016.
The U.S. government cut its oil production forecast for the first time in six months as drillers scale back in smaller shale plays and the U.S. Gulf of Mexico. While crude output is still expected to reach record levels, the Energy Information Administration trimmed its 2019 forecast to 12.3 million barrels a day -- 110,000 barrels-a-day lower than its previous forecast.
“This is just the beginning,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago. Many shale drillers “are not making money and are having a hard time keeping these production levels up.”
U.S. crude output fell for the first time this year when output dropped by 100,000 barrels a day last week to 12 million, according to the Energy Information Administration.