U.S. energy firms this week cut the number of oil and natural gas rigs operating for a third week in a row to the lowest since December 2021, energy services firm Baker Hughes said in its closely followed report on Jan. 24.
The oil and gas rig count, an early indicator of future output, fell by four to 576 in the week to Jan. 24.
Baker Hughes said this week's decline puts the total rig count down 45, or 7% below this time last year.
Baker Hughes said oil rigs fell by six to 472 this week, their lowest since December 2021, while gas rigs rose by one to 99.
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 paying down debt and boosting shareholder returns rather than raising output.
Even though analysts forecast U.S. spot crude prices could 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 13.6 MMbbl/d in 2025.
On the gas side, the EIA projected a 43% 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 104.5 Bcf/d in 2025, up from 103.1 Bcf/d in 2024 and a record 103.6 Bcf/d in 2023.