Oil rebounds on largest rig count drop since April

HOUSTON — U.S. drillers idled another 26 oil rigs this week, sending the price of oil higher and bringing the number of rigs chasing crude to a five-year low.

This was the largest week-over-week decrease since April and brings the number of active oil rigs to 614. That’s below the previous low for 2015 set in May, according to the count by oil service firm Baker Hughes. The number of gas rigs fell by two to 195 and miscellaneous rigs fell by one. Combined, the rig count fell by 29 to 809.

U.S. crude oil swung to a gain shortly after the report was released. Traders bid the price up by 59 cents or 1.3 percent to $45.33 per barrel. Before the report, oil had edged lower on a weaker-than-expected jobs report.

Between May and August, drillers added rigs and resumed drilling as the price of oil rebounded to near $60 per barrel in a short-lived rally. But the count began falling once more in September as the price of oil resumed its slide.

Related: Five factors influencing oil prices today

The Baker Hughes rig count serves as a proxy for oil industry activity. Less drilling will ultimately mean fewer barrels of oil pulled from the ground. Recently, though, the relationship between U.S. 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.

Related: Shale output fell by 350,000 barrels a day since April

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.

Compared to the rig count, that’s a mild decline. The U.S. oil rig count peaked at 1,609 in October and has now fallen by 62 percent.