U.S. energy firms cut the number of oil and natural gas rigs operating for a fourth month in a row to the lowest since October 2021, 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 547 in the week to June 27.
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 six to 432 this week, also their lowest since October 2021, while gas rigs decreased by two to 109.
In the Permian Basin in West Texas and eastern New Mexico, the nation’s biggest oil-producing shale formation, drillers cut one rig this week, bringing the total down to 270, the lowest since October 2021.
Drillers also cut five rigs in Wyoming this week, bringing the total in the state down to 18, the lowest since January. That five rig decline was the most in a week since 2020.
In June, drillers cut 16 oil and gas rigs, putting the total count down for a fourth month in a row for the first time since June 2024.
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.
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, 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; Editing by Marguerita Choy and Diane Craft)