U.S. energy firms this week cut the number of oil and natural gas rigs operating to the lowest since January 2022 for a third week in a row, energy services firm Baker Hughes said in its closely followed report on June 21.
The oil and gas rig count, an early indicator of future output, fell by two to 588 in the week to June 21.
Baker Hughes said that puts the total rig count down 94, or 14% below this time last year.
Baker Hughes said oil rigs fell three to 485 this week, their lowest since January 2022, while gas rigs were unchanged for a third week in a row at 98, their lowest since October 2021.
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.
The rig count in the Permian Basin, the largest U.S. oilfield, is expected to move roughly sideways this year, but edge down below 300 by year-end-2026 as U.S. producers remain capital disciplined, Goldman Sachs said this week.
In the Permian formation in West Texas and eastern New Mexico, the total oil and gas count fell by one to 308 this week, the lowest since January, according to Baker Hughes.
Production growth in maturing Permian is likely to gradually slow down from exceptionally strong 520,000 barrels per day in 2023 to a still robust 270,000 bpd in 2026, it said.
U.S. oil futures were up about 10% so far in 2024 after dropping by 11% in 2023, while U.S. gas futures have gained about 7% so far in 2024 after plunging by 44% in 2023.