U.S. energy firms this week cut the number of oil and natural gas rigs operating for a fourth week in a row for the first time since September 2023, energy services firm Baker Hughes BKR.O said in its closely followed report on April 12.
The oil and gas rig count, an early indicator of future output, fell by three to 617 in the week to April 12, the lowest since November.
Baker Hughes said that puts the total rig count down 131, or 18%, below this time last year.
Baker Hughes said oil rigs fell by two to 506 this week, while gas rigs decreased by one to 109, their lowest since January 2022.
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 20% 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.
Crude oil prices have climbed to their highest this year, but a weak natural gas market, steeper costs and a focus on shareholder returns over new production are keeping shale drillers from big output increases in the world's top oil and gas producer.
U.S. crude outputis forecast to rise from a record 12.9 MMbbl/d in 2023 to 13.2 MMbbl/d in 2024 and 13.7 MMbbl/d in 2025, according to the latest U.S. Energy Information Administration (EIA) outlook.
But the drop in gas prices to a 3-1/2-year low in February and March will cut U.S. gas output to 103.6 Bcf/d in 2024 from a record 103.8 Bcf/d in 2023, according to the EIA, as some producers slash spending and reduce drilling activities.