U.S. energy firms this week cut the number of oil and natural gas rigs operating for a fifth week in a row to the lowest since November 2021, energy services firm Baker Hughes said in its closely followed report on Friday.
It was the first time since September 2023 that the number of rigs declined for five straight weeks.
The oil and gas rig count, an early indicator of future output, fell by three to 563 in the week to May 30.
Baker Hughes said this week’s decline put the total count down by 37 rigs, or 6%, from this time last year.
Baker Hughes said oil rigs fell by four to 461 this week, their lowest since November 2021. Gas rigs rose by one to 99.
In the Permian Basin in West Texas and eastern New Mexico, the nation’s biggest oil-producing shale formation, drillers cut one rig, bringing the total down to 278, the lowest since November 2021.
In New Mexico, drillers cut one rig, bringing the total down to 91, the lowest since December 2021.
For the month, the total count dropped by 24, its third straight monthly decrease and the biggest monthly decline since August 2023.
The oil and gas rig count declined by about 5% in 2024 and 20% in 2023. 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 by around 3% in 2025 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.
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 David Gregorio)