The number of active crude oil and natural gas rigs in the U.S. has fallen to the lowest on record, the country's Energy Information Administration (EIA) said in a statement Wednesday.
Oil and natural gas producers in the US were operating the fewest oil and gas drilling rigs on record at 339 on May 12 -- the lowest level in data records of oilfield services company Baker Hughes that had started in 1987, the EIA said.
The number of active rigs started a sharp decline in mid-March as crude oil prices began plummeting. Since March 17, the total number of oil and gas rigs has fallen by 433, or 56%.
Since that day, a total of 308 rigs, or 71%, that have been taken out of service are located in the top three US crude oil-producing regions, which are the Permian basin located between southeastern New Mexico and western Texas, the Eagle Ford basin in southern Texas, and the Bakken region in Montana and North Dakota.
"Drilling in oil-focused plays has declined as the impact of mitigation efforts for the 2019 novel coronavirus (COVID-19) have caused declines in petroleum demand and the resulting fall in crude oil prices," the EIA said in the statement.
"Changes in the number of oil rigs have historically followed changes in oil prices with a lag time of about four months. However, the current drop in rig count followed the recent decrease in the oil price much more rapidly than in the past," it added.
The spot price of American benchmark West Texas Intermediate (WTI) started in March this year at $46.78 per barrel, but ended the month at $20.51 per barrel, the EIA noted.
"The quick reduction in active rigs reflects the sudden loss of petroleum demand related to coronavirus-related mitigation efforts that also resulted in recent increases in the amount of crude oil placed in storage," the statement said.
For natural gas, however, prices were already seeing low levels in early 2020 due to record-high production in November 2019, low demand because of warm weather, and relatively small withdrawals from storage for heating during the winter season from November 2019 until the end of March 2020, according to the EIA.
By Ovunc Kutlu