U.S. energy firms in February cut the most oil and natural gas rigs in a month since June 2020, with the gas rig count falling to the lowest since April, energy services firm Baker Hughes Co said in its closely followed report on Feb. 24.
The oil and gas rig count, an early indicator of future output, fell seven to 753 in the week to Feb. 24.
Despite this week's rig decline, Baker Hughes said the total count was still up 103 rigs, or 15.8%, over this time last year.
U.S. oil rigs fell seven to 600 this week, while gas rigs were unchanged at 151.
For the month, the total oil and gas rig count was down 18, falling for a third month in a row for the first time since July 2020.
The oil rig count was down nine in February, while the gas rig count also fell nine in its biggest monthly drop since April 2020.
U.S. oil futures were down about 5.3% so far this year after gaining about 7% in 2022. U.S. gas futures, meanwhile, have plunged about 45% so far this year after rising about 20% last year.
Weaker energy prices are expected to impact drilling activity, which was recovering from pandemic-related cuts, but slowly, due to rising labor and equipment costs and as many firms were still more focused on returning money to investors and paying down debt rather than boosting production.
To avoid a looming oversupply situation in the gas market that has already caused gas futures to drop to 29-month lows this week, many analysts have said producers will have to cut the number of rigs drilling for gas this year.
Shale companies have been pulling back on gas activity as prices have slumped.
Gas-focused producer Chesapeake Energy Corp said this week it planned to drop three drilling rigs this year and reduce well completions activities.
Rival Coterra Energy said it expected its oil volumes to grow by about 2% this year, while its gas output would decline 1% versus the prior year.
Oil prices will likely climb to the $90/bbl-$100/bbl range by this summer, the chief executive of shale producer Pioneer Natural Resources said.