On Thursday, the Baker Hughes weekly U.S. rig count hit another historic low at 464, representing the fourteenth straight week of declines and the lowest level since data collection began in 1949.
As recently as 2012, the count exceeded 2,000 active rigs, but over the past year, U.S. oil and gas drillers have cut back by an average of about 20 rigs per week.
Active oil rigs (excluding gas) were down to 372, the fewest since late 2009.
But analysts see signs for cautious optimism, at least for some onshore producers. Oil futures are trading at $42 per barrel through 2016 and nearing $45 per barrel for 2017, a good sign for shale drilling operators.
"Based on indications from exploration and production, activity can begin to increase at the $45 level. E&Ps are hedging when the 2017 strip is at or above $45," analysts at Cowen & Co, a financial services firm, said in a note this week.
But a more widespread turnaround may not occur until next year or later. On Thursday, Dan Young, Wood Mackenzie's head of consulting for Asia Pacific, told an audience at the Offshore Technology Conference that the firm estimates that the value of oil and gas projects deferred since the start of the downturn could rise to $500 billion - up from Wood Mac's year-end estimate of $400 billion. "What we have seen since the end of last year is that that number continues to grow and more and more people talk about project cancellations rather than deferrals . . . Will we get to half a trillion dollars in the course of this year? I won't be surprised if we go that far," he said.
With so many E&P firms pulling back, production is expected to remain relatively flat, potentially leading to price improvements next year. Craig McMahon, Wood Mac's head of research for Asia-Pacific, said that increasing demand should "redress the balance and the oversupply within the market" - leading prices to recover gradually towards the second half of 2017, back towards $60 a barrel.