Oil rig count in the US hits a five-year low of 595 as drilling activity slumps

US energy companies reduced the number of active oil rigs by another 10 during the week ended 16 October, bringing down the total rig count down in the country to 595, the least since July 2010.

This is the seventh consecutive reduction in rig count by US oil drillers who had cut 70 rigs over the prior six weeks, oil services company Baker Hughes Inc said in its report.

The longest streak of reductions since June follows continued slide in oil prices, data showed on Friday.

The number of rigs drilling for oil in the United States totaled 595 in the week ended 16 October, compared with 605 in the prior week and 1,590 a year ago, data from the latest Baker Hughes Inc North American Rotary Rig Count showed.

Including 192 other rigs drilling for natural gas, there were a total of 787 working rigs in the country, down by eight week over week and down 1,131 year over year.

With 192 gas rigs, these were just over the lowest level in at least 28 years, according to Baker Hughes data going back to 1987.

The total number of oil and gas rigs in the US was less than half the 1,590 oil rigs in the prior year. Since hitting an all-time high of 1,609 in October last year, weekly rig count reductions have averaged about 20.

Despite drilling cutbacks, US oil production edged up to 9.4 million barrels per day (bpd) in July from 9.3 million bpd in June, according to the latest US Energy Information Administration's (EIA) 914 production report.

Traders normally look to the rig count as an indicator of whether production may rise or fall over the next several months.

The reductions over the past several weeks have erased the 47 oil rigs energy firms added over the summer when several drillers followed through on plans to add rigs announced in May and June when US crude futures averaged $60 a barrel.

US oil futures this week averaged $47 a barrel, down from an average of $48 last week, in choppy trade driven up and down by mostly technical buying and selling.

In addition to the weekly report from the US Energy Information Administration, both OPEC and the International Energy Agency (IEA) issued their monthly reports last week. OPEC raised its demand growth  for 2015 and said its policy is working to maintain its market share.

The IEA expects demand growth to fall from around 1.8 million barrels a day in 2015 to 1.2 million barrels a day in 2016. The agency noted that OPEC production totaled 31.72 million barrels a day in September and that the call on OPEC supply will drop to 31.1 million barrels a day in 2016.