U.S. energy firms this week cut the number of oil and natural gas rigs operating for the third week in a row for the first time since mid April, 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, fell by two to 576 in the week to May 16, the lowest since January.
Baker Hughes said this week’s decline put the total rig count down by 28 rigs, or 5% below this time last year.
Baker Hughes said oil rigs fell by 1 to 473 this week, their lowest since January, while gas rigs fell by 1 to 100 in their first decrease since early April.
In the Permian basin in West Texas and eastern New Mexico, the nation’s biggest oil-producing shale formation, drillers cut three rigs, bringing the total down to 282, the lowest since November 2021.
In New Mexico, drillers cut two rigs, bringing the total down to 94, the lowest since February 2022.
The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on boosting shareholder returns and paying down debt rather than increasing output.
The independent exploration and production (E&P) companies tracked by U.S. financial services firm TD Cowen said they planned to cut capital expenditures in 2025 by around 3% from levels seen in 2024.
That compares with roughly flat year-over-year spending in 2024, and increases of 27% in 2023, 40% in 2022 and 4% in 2021.
Even though analysts forecast U.S. spot crude prices would decline for a third year in a row in 2025, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.4 million bpd in 2025.
That increase in U.S. crude output, however, was lower than EIA’s outlook in April due to lower oil price forecasts as U.S. President Donald Trump’s trade tariffs increase the chances of weaker global economic growth and oil demand.
On the gas side, EIA projected an 88% increase in spot gas prices in 2025 would prompt producers to boost drilling activity this year after a 14% price drop in 2024 caused several energy firms to cut output for the first time since the COVID-19 pandemic reduced demand for the fuel in 2020.
EIA projected gas output would rise to 104.9 billion cubic feet per day (bcfd) in 2025, up from 103.2 bcfd in 2024 and a record 103.6 bcfd in 2023.
(Reporting by Scott DiSavino; Editing by Chizu Nomiyama)