U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second week in a row for the first time since late June, energy services firm Baker Hughes said in its closely followed report on August 23.
The oil and gas rig count, an early indicator of future output, fell by one to 585 in the week to Aug. 23.
Baker Hughes said that puts the total rig count down 47, or 7% below this time last year.
Baker Hughes said oil rigs were unchanged at 483 this week, while gas rigs fell by one to 97.
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 5% so far in 2024 after dropping by 11% in 2023, while U.S. gas futures NGc1 were down about 19% so far in 2024 after plunging by 44% in 2023.
That increase in oil prices should encourage drillers to boost U.S. crude output 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.
On the gas side, several producers reduced spending on drilling activities earlier in the year after prices dropped to 3-1/2-year lows in February and March.
That drilling decline should cause U.S. gas output to slide to 103.3 Bcf/d in 2024, down from a record high of 103.8 Bcf/d in 2023, according to the EIA.