March 22 (Reuters) - U.S. energy firms this week reduced thenumber of oil rigs operating for a fifth week in a row to itslowest in nearly a year as independent producers follow throughon plans to cut spending on new drilling with the governmentcutting its growth forecasts for shale output.
Drillers cut nine oil rigs in the week to March 22, bringingthe total count down to 824, the lowest since April 2018,General Electric Co's Baker Hughes energy services firmsaid in its closely followed report on Friday. <RIG-OL-USA-BHI>
That is the first time the rig count has declined for fiveweeks in a row since May 2016 when it fell for eight consecutiveweeks.
The U.S. rig count, an early indicator of future output, isstill a bit higher than a year ago when 804 rigs were activeafter energy companies boosted spending in 2018 to capturehigher prices that year.
Drilling this year has slowed with the rig count contractingfor the past three months as independent exploration andproduction companies cut spending as they focus on earningsgrowth instead of increased output with crude prices projectedto decline in 2019 versus 2018.
U.S. oil output from seven biggest shale formations, thenation's major producing regions, was expected to rise by 85,000barrels per day (bpd) in April to a record 8.59 million bpd, theU.S. Energy Information Administration said in its monthlydrilling productivity report on Monday.
The increase, however, would be the smallest monthlyincrease since May 2018, continuing a pattern of shrinkinggrowth.
The EIA last week already forecast total crude productionwas expected to grow slower than previously expected in 2019 butstill average a record high 12.3 million bpd, from the all-timehigh at 11.0 million bpd in 2018.
U.S. crude futures rose over $60 a barrel this weekfor the first time in four months due to supply cuts by theOrganization of the Petroleum Exporting Countries (OPEC) and itsallies and U.S. sanctions on Iran and Venezuela.
Looking ahead, crude futures were trading around $59 abarrel for the balance of 2019 and near $58 incalendar 2020.
U.S. financial services firm Cowen & Co said this week thatprojections from the exploration and production (E&P) companiesit tracks point to a percentage decline in the mid single digitsin capital expenditures for drilling and completions in 2019versus 2018.
Cowen said independent producers expect to spend about 11percent less in 2019, while international oil companies plan tospend about 16 percent more.
The majors' rising investment reflects a recognition thatExxon Mobil Corp, Chevron Corp, Royal DutchShell and BP Plc largely missed out on the firstphase of the Permian shale bonanza while more nimble independentproducers, who pioneered shale drilling technology, leasedPermian acreage on the cheap.
In total, Cowen said all of the E&P companies it tracks thathave reported will spend about $81.0 billion in 2019 versus$85.5 billion in 2018.
There were 1,016 oil and natural gas rigs active in theUnited States this week, according to Baker Hughes. Most rigsproduce both oil and gas.
Analysts at Simmons & Co, energy specialists at U.S.investment bank Piper Jaffray, this week forecast the averagecombined oil and gas rig count will fall from 1,032 in 2018 to999 in 2019 before rising to 1,087 in 2020. That was the same asits predictions since the start of the year.
(Reporting by Scott DiSavinoEditing by Marguerita Choy)
