U.S. energy firms this week added oil and natural gas rigs for the first time in five 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 2 to 619 in the week to April 19. Despite this week’s rig increase, Baker Hughes said the total count was still down 134, or 18%, from this time last year.
Baker Hughes said oil rigs rose 5 to 511 this week, their highest since September, while gas rigs fell 3 to 106, their lowest since December 2021.
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 up about 17% so far in 2024 after dropping by 11% in 2023. U.S. gas futures, meanwhile, were down about 30% so far in 2024 after plunging by 44% in 2023.
That increase in oil prices should encourage drillers to boost U.S. crude output from a record 12.9 million barrels per day (bpd) in 2023 to 13.2 million bpd in 2024 and 13.7 million bpd in 2025, according to the latest U.S. Energy Information Administration (EIA) outlook.
But the drop in gas prices to 3-1/2-year lows in February and March has caused several producers to slash spending and reduce drilling activities, which should cut U.S. gas output to 103.6 billion cubic feet per day (bcfd) in 2024 from a record 103.8 bcfd in 2023, according to the EIA.
(Reporting by Scott DiSavino; Editing by Chizu Nomiyama)