North Dakota’s oil production was flat in February, while the state’s rig count sank this month to a low not seen since October 2005.
The malaise has been expected as oil prices have hovered below $40 a barrel. Prices for benchmark West Texas Intermediate crude have crossed the $40-per-barrel mark over the past week, but the long-term market outlook is still weak as the world is awash in oil supplies.
“Oil price weakness is the primary reason for the slowdown and is now anticipated to last into at least the third quarter of this year and perhaps into the second quarter of 2017,” Lynn Helms, director of the North Dakota Department of Mineral Resources, said in his monthly update on oil production.
North Dakota, the nation’s second-largest oil-producing state with its vast Bakken fields, pumped 1.118 million barrels per day in February, down from 1.122 million in January.
The number of rigs that drill for oil is currently at 29, down from 52 in January and 40 in February. The all-time high was 218 in May 2012.
“Operators are committed to running the minimum number of oil rigs while prices remain at current low levels,” Helms said.
Major oil-producing countries continue to pump out crude at high rates, and the lifting of sanctions on Iran has only added to supply.
A weaker economy in China, a major oil consumer, hasn’t helped, either.