U.S. Energy Firms Reduce Rig Count for Third Consecutive Week

U.S. energy firms have cut the number of oil and natural gas rigs operating for a third week in a row, reaching the lowest count since December 2021, according to the latest report from energy services firm Baker Hughes.

The oil and gas rig count, which serves as an early indicator of future output, decreased by four to a total of 576 in the week ending January 24th. This drop marks a 7% decline compared to the same period last year.

Baker Hughes reported that oil rigs saw a decrease of six to 472, hitting their lowest level since December 2021, while gas rigs increased by one to reach 99.

Over the past few years, the oil and gas rig count has experienced a decline of approximately 5% in 2024 and 20% in 2023. This trend can be attributed to lower U.S. oil and gas prices, leading energy companies to prioritize debt reduction and shareholder returns over production increases.

Despite predictions of a third consecutive year of declining U.S. spot crude prices in 2025, the U.S. Energy Information Administration (EIA) forecasts a rise in crude output from a record 13.2 million barrels per day in 2024 to around 13.6 million barrels per day in 2025.

On the natural gas front, the EIA anticipates a 43% increase in spot gas prices in 2025, prompting producers to ramp up drilling activity this year. Following a 14% price drop in 2024, several energy firms had reduced output for the first time since the COVID-19 pandemic impacted demand for gas in 2020.

The EIA projects that gas output will climb to 104.5 billion cubic feet per day in 2025, up from 103.1 billion cubic feet per day in 2024 and a record 103.6 billion cubic feet per day in 2023.