U.S. energy firms this week cut oil rigs by the most in a week since June 2023, lowering the total oil and natural gas rig count for a third consecutive week, 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 seven to 583 in the week to April 11, the biggest weekly decline since June 2024.
Baker Hughes said this week’s decline puts the total rig count down 34 rigs, or 6% below this time last year.
Baker Hughes said oil rigs fell by nine to 480 this week, while gas rigs rose by one to 97.
In the Permian basin in West Texas and eastern New Mexico, the nation’s biggest oil-producing shale basin, the rig count fell by five, cutting the total count to 289, the lowest since December 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) on Thursday projected crude output would rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.5 million bpd in 2025.
That increase in U.S. crude output, however, was lower than EIA’s outlook in March due to lower oil price forecasts as U.S. President Donald Trump’s tariffs increase the chances of weaker global economic growth and oil demand.
Oil production in the Permian was forecast to decline to 6.51 million bpd in April from 6.57 million bpd in March, the EIA said.
On the gas side, the EIA projected a 95% increase in spot gas prices in 2025 would prompt producers to boost drilling activity this year after a 14% price drop in 2024 resulted in a cut in 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 105.3 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 Marguerita Choy)