U.S. energy firms this week cut the number of oil and natural gas rigs operating for a fourth week in a row for the first time since July 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.
The oil and gas rig count, an early indicator of future output, fell by 3 to 746 in the week to March 10, the lowest since June.
Despite this week’s rig decline, Baker Hughes said the total count was still up 83 rigs, or 13%, over this time last year.
U.S. oil rigs fell by 2 to 590 this week, also their lowest since June, while gas rigs also fell by 1 to 153.
U.S. oil futures were down about 4% so far this year after gaining about 7% in 2022. U.S. gas futures, meanwhile, have plunged about 45% so far this year after rising about 20% last year.
Energy traders said recent energy prices declines have already caused several exploration and production companies to cut back on the number of rigs they use to drill for oil and gas for three months in a row from December-February.
Some energy firms have said in recent weeks that they would cut the number of rigs drilling for gas, especially in the Haynsesville shale in Arkansas, Louisiana and Texas.
U.S. energy advisor Tudor Pickering Holt & Co, however, noted those gas rig declines “will take time to materialize as operators will likely retain the rigs until current pads complete.”
Despite lower rig counts seen in recent months, U.S. crude production was still on track to rise from 11.9 million barrels per day (bpd) in 2022 to 12.4 million bpd in 2023 and 12.6 million bpd in 2024, according to projections from the U.S. Energy Information Administration (EIA) in March. That compares with a record 12.3 million bpd in 2019.
Those oil production forecasts for 2023 and 2024, however, were smaller than EIA’s projections in February.
U.S. gas production, meanwhile, was on track to rise from a record 98.09 billion cubic feet per day (bcfd) in 2022 to 100.67 bcfd in 2023 and 101.69 bcfd in 2024, according to federal energy data in March.
Those gas production forecasts for 2023 and 2024 were bigger than EIA’s projections in February.