Business

Oil prices climb on signs of reduced drilling in U.S.

The price of oil jumped up Friday on indications on expectations of lower supplies since the number of working drilling rigs continues to fall. Aaron Kent, a wireline operator for Canary, LLC works on a slick line at an oil rig pump jack site in the oil fields near Bakersfield in March 2013.
The price of oil jumped up Friday on indications on expectations of lower supplies since the number of working drilling rigs continues to fall. Aaron Kent, a wireline operator for Canary, LLC works on a slick line at an oil rig pump jack site in the oil fields near Bakersfield in March 2013. TNS

The price of oil jumped Friday on indications that production in the U.S. will slow because of the big drop in prices since June.

Benchmark U.S. crude rose $3.71 to $48.24 a barrel in New York on expectations of lower supplies as the number of working drilling rigs continues to fall.

On Friday, Baker Hughes, the Houston oil field services company, reported that the number of rigs drilling for oil in the U.S. fell by 94 in the past week to 1,223, down 199 from last year.

Texas was the biggest loser, with 58 fewer rigs. Of the other major oil- and gas-producing states, Oklahoma lost 10, North Dakota and Wyoming lost four, Ohio lost three, New Mexico and West Virginia lost two, and Kansas and Utah lost one each, Baker Hughes said.

In the Barnett Shale, the number of rigs, most of them searching primarily for natural gas, dropped by two to nine, according to RigData. Tarrant County had two rigs, while Cooke, Denton, Jack, Johnson, Palo Pinto, Parker and Wise counties had one each.

Nationally, three additional rigs were searching for gas, bringing the total to 319.

While oil had a strong day, it remains mired in a slump. The price of benchmark U.S. crude has fallen from over $107 in June as global supplies grew faster than demand. OPEC also has declined to cut back production, pressuring U.S. companies to curtail drilling.

Halliburton and Schlumberger, two of the largest oil field services companies, have announced thousands of layoffs. Drilling-rig maker and operator Helmerich & Payne in Tulsa announced this week that it plans to lay off 2,000 employees.

BP told workers Monday that it will freeze their pay for 2015, and on Friday, Chevron posted a 30 percent decline in fourth-quarter profit, a day after Royal Dutch Shell reported a 57 percent drop.

Stocks in energy companies have fallen nearly 12 percent in three months, and Exxon Mobil and BP will announce their earnings next week.

The analysis firm Wood MacKenzie predicts that oil and gas companies will spend $50 billion less this year in North America than last year, a drop of nearly 40 percent.

Oil companies are among the biggest corporate spenders because the cost of exploring for and producing oil and gas in difficult places is high. Chevron’s Gorgon natural gas project in Australia, for example, is expected to cost $54 billion.

Costs could fall, though. When oil prices drop and drilling slows, rig operators and other companies that work for big oil producers charge less. That could make some projects more profitable.

Staff writer Max B. Baker contributed to this report, which includes material from The Associated Press.

  Comments