U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second week in a row, energy services firm Baker Hughes said in its closely followed report on Aug. 1.
The oil and gas rig count, an early indicator of future output, fell by two to 540 in the week to August 1, the lowest since October 2021.
Baker Hughes said this week's decline puts the total rig count down 46 rigs, or 7.8% below this time last year.
Baker Hughes said oil rigs fell by five to 410 this week, their lowest since September 2021, while gas rigs rose by two to 124, their highest since August 2023.
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 MMbbl/d in 2024 to around 13.4 MMbbl/d in 2025.
On the gas side, the EIA projected a 68% 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 Bcf/d in 2025, up from 103.2 Bcf/d in 2024 and a record 103.6 Bcf/d in 2023.