U.S. energy firms this week cut the number of oil and natural gas rigs operating for the first time in five weeks, energy services firm Baker Hughes said in its closely followed report on Dec. 15.
The oil and gas rig count, an early indicator of future output, fell by three to 623 in the week to Dec. 15.
Data provider Enverus, which publishes its own rig count data, said drillers cut five rigs in the week ended Dec. 13, cutting the total to 673. That put the overall count down about 2% in the last month and down about 22% year-over-year.
Baker Hughes said U.S. oil rigs fell two to 501 this week, while gas rigs were unchanged at 119.
That brings the rig count down from a post-pandemic high of 784 in December 2022 due to a drop in oil and gas prices.
U.S. oil futures were down about 11% so far this year after gaining 7% in 2022. U.S. gas futures, meanwhile, have plunged about 44% so far this year after rising about 20% last year.
With oil and gas prices down, 14 of the independent exploration and production companies tracked by U.S. financial services firm TD Cowen said they planned to cut spending by about 4% in 2024 versus 2023.
TD Cowen said 25 of the E&Ps it tracks said they planned to boost spending by about 20% in 2023 versus 2022 after increasing spending about 40% in 2022 and 4% in 2021.
Much of that extra 2023 spending, however, went to cover rising inflation-related costs for labor and equipment as many firms remain more focused on returning money to investors and paying down debt rather than boosting oil and gas production.
But even as some producers have cut back on new drilling over the past year, oil and gas output was still on track to hit record highs in 2023 and 2024 as firms complete work on their already drilled wells.
The total number of Drilled but Uncompleted (DUC) oil and gas wells dropped in October to the lowest since December 2013, according to the U.S. Energy Information Administration's (EIA) Drilling Productivity Report.