U.S. energy firms cut oil rigs by the most this week since September, reducing the total oil and gas count for a second week in a row as crude prices remained negative for the year.
The U.S. oil and gas rig count, an early indicator of future output, fell by four to 776 in the week to Dec. 16, energy services firm Baker Hughes Co said in its closely followed report on Dec. 16.
Despite this week's rig decline, Baker Hughes said the total count was still up 197, or 34%, over this time last year.
U.S. oil rigs fell five to 620 this week, their lowest in six weeks, while gas rigs rose one to 154.
U.S. oil futures were down about 1% so far this year after soaring 55% in 2021.
Oil output from the Permian shale basin, the biggest U.S. oilfield, is set to touch a record 5.6 MMbbl/d in January, but the increase is a third of September's pace, the government forecast this week.
Overall U.S. shale output is forecast to reach a record 9.3 MMbbl/d in January, according to the data, up only 94,500 bbl/d over the prior month.
Gains slowed as some of the largest firms are warning of overworked oilfields and less productive new wells, as many companies focus more on returning money to investors and paying down debt rather than boosting output.
Even though several energy firms have boosted spending for a second year in a row in 2022, some analysts noted that energy firms did not use the money this year to boost production but instead spent more on equipment and labor due to soaring inflation and supply disruptions.
U.S. crude production was on track to rise from 11.25 MMbbl/d in 2021 to 11.87 MMbbl/d in 2022 and 12.34 MMbbl/d in 2023, according to federal energy data. That compares with a record 12.32 MMbbl/d in 2019.