June 4 (Reuters) - U.S. energy firms this week cut the
number of oil and natural gas rigs operating for the first time
in six weeks as growth in drilling slows despite crude prices
hitting their highest since 2018.
The U.S. oil and gas rig count, an early indicator of future
output, fell by one to 456 in the week to June 4, according to
data on Friday from energy services firm Baker Hughes Co
. <RIG-OL-USA-BHI> <RIG-OL-USA-BHI> <RIG-GS-USA-BHI>
Despite this week's decline, the total rig count was up 172
rigs, or 61%, over this time last year. It was also up 87% since
falling to a record low of 244 in August 2020, according to
Baker Hughes data going back to 1940.
U.S. oil rigs were steady at 359 this week, after rising for
four weeks in a row. Gas rigs fell one to 97, dropping for a
fourth straight week in the longest losing streak since May
U.S. crude futures were trading above $69 a barrel on
Friday, putting the contract on track for its highest close
since October 2018.
With prices mostly rising since October 2020, some energy
firms have said they plan to boost spending after cutting
drilling and completion expenditures over the past two years.
That spending increase, however, remains small as most firms
continue to focus on boosting cash flow, reducing debt and
increasing shareholder returns rather than adding output.
Since the middle of February, the rate at which rigs have
been added and total number employed have both started to lag
behind previous recoveries.
Many analysts do not expect that extra spending to boost
output at all. Instead, they think it will only replace natural
declines in existing well production.
"We continue to see limited remaining upside for rig count
activity in the United States, with rig additions having slowed
down recently," analysts at Goldman Sachs said.
Goldman forecast the rig count would reach 490-510 rigs by
the end of 2021, keeping U.S. production flat.
(Reporting by Scott DiSavino
Editing by Marguerita Choy)