U.S. energy firms this week cut the number of oil and natural gas rigs operating for a third week in a row, energy services firm Baker Hughes said on Oct. 4 in its closely followed report.
The oil and gas rig count, an early indicator of future output, fell by two to 585 in the week to Oct. 4.
Baker Hughes said that puts the total rig count down 34 rigs, or 5.5%, below this time last year.
Baker Hughes said oil rigs fell by five to 479 this week, their lowest since July 19, while gas rigs rose by 3 to 102, their highest since July 19.
The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021. The count is down this year 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 4.9% so far in 2024 after dropping by 11% in 2023, while U.S. gas futures were up about 13.2% so far in 2024 after plunging by 44% in 2023.
Those higher oil prices prompted drillers to boost U.S. crude output from a record 12.9 MMbbl/d in 2023 to 13.3 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 average spot prices at the U.S. Henry Hub benchmark in Louisiana plunged to a 32-year low in March.
That drilling decline should cause U.S. gas output to slide to 103.4 Bcf/d in 2024, down from a record high of 103.8 Bcf/d in 2023, according to the EIA.