More oil rigs shut down

HOUSTON — Drillers found another 13 oil rigs to set aside this week, as the industry continued to tighten its belt amid low prices.

The number of U.S. rigs chasing oil fell to a total of 646, while gas rigs rose by three to 225. Combined, the total Baker Hughes rig count fell by 10 to 875. Miscellaneous rigs were unchanged at four.

The rig count, considered a proxy for industry activity, has fallen sharply since oil prices collapsed last summer. Exploration and production companies have slashed budgets and idled rigs as drilling for now-cheaper crude has become less profitable.

Overall, Baker Hughes’ rig count has fallen from an October 2014 high of 1,609 oil rigs. The retreat has fueled somewhat of a recovery in the price of oil, as traders have linked the less drilling activity to fewer barrels of oil flowing from wells.

But while U.S. production’s rapid growth has slowed, so far there’s been little indication that production is about to fall off. The rig count has fallen by about 60 percent, but a weekly production estimate made by the U.S. Energy Information Administration showed production growing by 300,000 barrels per day last week to the highest level in data stretching back to 1983. That production figure is a rough estimate — and it often lags behind changes in actual production.

Crude oil prices were up sharply before the Baker Hughes count was released and showed little sign of slowing as traders digested the new. Benchmark next-month West Texas Intermediate rose $2.55 to $60.23, once again above the $60.00 mark that the contract had slipped below this week. International Brent crude was up $2.79 in early trading to $65.37.