U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second week in a row for the first time since August, 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 six to 542 in the week to December 19, the lowest since September.
Baker Hughes said oil rigs fell by eight to 406 this week, their lowest since September 2021, while gas rigs held at 127 and miscellaneous rigs rose by two to nine.
In the Permian Basin in West Texas and eastern New Mexico, the biggest U.S. oil-producing shale formation, the rig count fell by three this week to 246, the lowest since August 2021.
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 13.6 million bpd in 2025.
On the gas side, EIA projected a 63% 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 107.7 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)