U.S. energy firms this week cut the number of oil and natural gas rigs operating for a 10th week in a row for the first time since July 2020, energy services firm Baker Hughes said in its closely followed report on Thursday.
The oil and gas rig count, an early indicator of future output, fell by eight to 539 in the week to July 3, the lowest since October 2021.
Baker Hughes released the report a day earlier than usual on Thursday due to the U.S. July Fourth holiday on Friday.
This week’s decline puts the total rig count down 46 rigs, or 8% below this time last year, Baker Hughes said.
Oil rigs fell by seven to 425 this week, their lowest since September 2021, while gas rigs fell by one to 108.
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.
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, the EIA projected an 84% 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.
The EIA projected gas output would rise to 105.9 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 and Sherin Elizabeth Varghese Editing by Marguerita Choy)