On July 12, U.S. energy firms reduced the number of operating oil and natural gas rigs for the fifth time in six weeks, according to Baker Hughes. The total rig count decreased by one to 584, marking a 13% decline from the previous year.
Oil rigs decreased by one to 478, the lowest since December 2021, while gas rigs also fell by one to 100. This reduction follows a broader trend, with the oil and gas rig count having dropped approximately 20% in 2023, contrasting sharply with increases of 33% in 2022 and 67% in 2021. Factors contributing to this decline include lower oil and gas prices, elevated costs for labor and equipment due to inflation, and a strategic shift by companies towards reducing debt and enhancing shareholder returns rather than expanding production.
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In 2024, U.S. oil futures have risen by about 16%, rebounding from an 11% drop in 2023, while U.S. gas futures have decreased by approximately 7% this year following a steep 44% decline in 2023.
The recent uptick in oil prices is expected to incentivize drillers to increase U.S. crude output, projected to rise from a record 12.9 million barrels per day (bpd) in 2023 to 13.3 million bpd in 2024 and 13.8 million bpd in 2025, according to the latest forecast from the U.S. Energy Information Administration (EIA).
Conversely, a significant decline in gas prices earlier in the year prompted several producers to curtail investment in drilling activities. Consequently, U.S. gas output is anticipated to decrease to 103.5 billion cubic feet per day (bcfd) in 2024, down from a peak of 103.8 bcfd in 2023, as per EIA projections.