U.S. Drillers Cut Oil and Gas Rigs for Fourth Time in Five Weeks – Baker Hughes

The oil and gas rig count, an early indicator of future output, fell by one to 585 in the week to Oct. 18.

Baker Hughes said that puts the total rig count down 39 rigs, or 6% below this time last year.

The number of oil rigs rose by one to 482 this week, while gas rigs fell by two to 99, Baker Hughes said.

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.

U.S. oil futures were down about 3% so far in 2024 after dropping by 11% in 2023, while U.S. gas futures were about 10% lower so far in 2024 after plunging by 44% in 2023.

The oil rig count is down about 4% so far this year, but crude production last week hit a record high of 13.5 million barrels per day (bpd) due to greater operating efficiencies.

U.S. crude output is forecast to rise from a record 12.9 million bpd in 2023 to 13.2 million bpd in 2024 and 13.5 million bpd 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 monthly average spot prices at the U.S. Henry Hub benchmark in Louisiana plunged to a 32-year low in March.

So far this year, the number of gas rigs has slumped by about 18%, which should cause U.S. gas output to slide to 103.5 billion cubic feet per day (bcfd) in 2024, down from a record high of 103.8 bcfd in 2023, according to the EIA.

(Reporting by Scott DiSavino Editing by Marguerita Choy)