Houston: US oil explorers idled rigs for a second straight week as Goldman Sachs Group Inc. said the oil glut could push prices as low as $20 a barrel.

Rigs targeting oil in the US fell by 10 to 652, Baker Hughes Inc. said on its website Friday. Explorers cut 13 last week. Natural gas rigs were trimmed by 6 to 196, bringing the US total down by 16 to 848.

The oil market remains more oversupplied than previously expected, with a surplus forecast to persist into 2016, Goldman analysts including Damien Courvalin wrote in a report today. The glut could force crude prices to plunge further before the market can rebalance.

“A lot of companies are in a wait-and-see mode, saying let’s see if this $20 talk happens,” Carl Larry, head of oil and gas for Frost & Sullivan LP, said by phone from Houston. “Instead of investing and bringing on new rigs, they’re saying, let’s see where it goes from here.”

West Texas Intermediate for October delivery fell $1.11, or 2.4 per cent, to $44.81 a barrel on the New York Mercantile Exchange at 2:08pm, and is down 2.5 per cent this week.

Drillers reduced the number of rigs seeking crude by one in each of the three biggest shale oil regions in the US — the Permian Basin, the Eagle Ford and the Bakken.

Price Risk

Rig counts risk falling further if oil prices remain at current levels, according to Bloomberg Intelligence.

“Well economics fail to justify the deployment of fresh drilling capital, even after factoring in 30 per cent declines in well costs and efficiency gains,” Andrew Cosgrove and William Foiles, analysts at Bloomberg Intelligence, wrote in a Sept. 8 report.

Natural gas rigs fell to the lowest level in Baker Hughes records dating back to 1987, led by a two-rig drop in the Eagle Ford in south Texas. The Energy Information Administration this week raised its forecast of gas production for this year to 78.95 billion cubic feet a day, which would be a record level.

Rigs Sidelined

America’s oil drillers have sidelined more than half the country’s rigs since October as the world’s largest suppliers battle for market share. The crude being pumped out of US shale formations helped create a global glut that’s pushed prices down almost 60 per cent since June 2014.

The Energy Information Administration reduced its forecasts for US crude output in 2015 and 2016, predicting a slide to 8.82 million barrels a day next year from 9.22 million a day in 2015 in its monthly Short-Term Energy Outlook on Wednesday.

Production this year is still projected to be the highest since 1972, the report showed. And a separate government report showed crude supplies rose 2.57 million barrels to 458 million, leaving stockpiles more than 100 million barrels above the five- year seasonal average.