A two-month slide in oil prices was reflected in a steady decline in the oil drilling rig count, according to the weekly rig count from Baker Hughes.

The overall rig count for Friday, Dec. 14, showed 1,071 rigs operating that week, down four from the week before with the loss on the oil rig side while gas drilling rigs remained flat. Natural gas development remained strong in the fourth quarter signifying the strength in the natural gas markets heading into the heating season. After climbing into the low $70s bbl in October, domestic oil prices steadily declined to reach a low for the year of $45 on Dec. 19. Analysts attributed weak oil prices to oversupplied markets and concerns of a slowing global economy.

With prices off their highs by more than one-third, the red-hot drilling segment appeared to take a breather in December.

The mid-December rig report for the Permian Basin, where nearly half of all U.S. oil rigs are running, companies laid down three rigs, while three rigs were dropped in the Williston. One rig each was added in the Eagle Ford and Utica Basins.

The November average overall rig count was 1,077, an increase of 15 from October and 166 more rigs running than one year earlier.

A more upbeat tone was found in analyst reviews of weekly oil supply data from the Energy Information Administration. Domestic crude oil inventories the first week of December decreased 7.3 MMbbl, the first decline in 11 weeks.

The reversal in U.S. production growth “will likely provide enough support at the low end of the recent range to hold off any further lower probes,” commented the industry analysts at DrillingInfo.

After a period of consolidation, prices should find a near-term range between $57.44 bbl and $49.18 bbl, DrillingInfo predicted. The firm’s forecast for 2019 is unchanged, it said, at between $60 - $65 bbl.

Earlier, as prices were trending up to peak in the low $70s bbl, oil production rose in lockstep.

According to the Energy Information Administration, the three largest producing states saw oil reach new record levels in September. In Texas, oil production reached 4.69 MM b/d.

In North Dakota, the second largest producing state, oil production averaged 1.33 MM b/d in September, a 2.4 percent increase from August.

New Mexico, which climbed into the No. 3 spot in 2018, saw September oil production rise to 738 M b/d, an increase of more than 25 percent since January.

Proof that 2018 was a ride on a roller coaster through a tunnel, by mid-December crude oil inventories had climbed by a surprising 3.5 MM bbl in the weekly report from API and while the report for the same week from EIA showed oil inventories declined by 500M bbl.