U.S. energy firms this week added oil and natural gas rigs for the first time in eight weeks, energy services firm Baker Hughes said in its closely followed report on Friday.
The oil and gas rig count, an early indicator of future output, rose by seven to 589 in the week to Dec. 6, its highest since mid-September.
Despite this week’s rig increase, Baker Hughes said the total count was still down 37, or 6% below this time last year.
Baker Hughes said oil rigs rose five to 482 this week, their highest since mid-October, while gas rigs rose by two to 102, the highest since early November.
The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to a decline in oil and gas prices, higher labor and equipment costs from soaring inflation and as companies focused on paying down debt and boosting shareholder returns instead of raising output.
U.S. oil futures were down 6% so far in 2024 after dropping by 11% in 2023. U.S. gas futures were up 23% so far in 2024 after plunging by 44% in 2023.
The 25 independent exploration and production (E&P) companies tracked by U.S. financial services firm TD Cowen said that on average the E&Ps planned to leave spending in 2024 roughly unchanged from 2023.
That compares with year-over-year spending increases of 27% in 2023, 40% in 2022 and 4% in 2021.
U.S. crude output was on track to rise from a record 12.9 million barrels per day (bpd) in 2023 to 13.2 million bpd in 2024 and 13.5 million bpd in 2025, according to the latest U.S. Energy Information Administration (EIA) outlook.
On the gas side, several producers reduced drilling activities this year after monthly average spot prices at the U.S. Henry Hub benchmark in Louisiana plunged to a 32-year low in March, and have remained relatively low since then.
That reduction in drilling activity should cause U.S. gas output to decline for the first time since the COVID-19 pandemic cut demand for the fuel in 2020.
EIA projected gas output would slide to 103.4 billion cubic feet per day (bcfd) in 2024, down from a record high of 103.8 bcfd in 2023.
(Reporting by Scott DiSavino; Editing by David Gregorio)