KEY POINTS
- U.S. rig count fell by one to 587, marking the second weekly drop.
- Oil rigs fell by four, while gas rigs increased by three.
- Despite the decline, U.S. crude production is expected to rise to 13.3 million bpd in 2024.
U.S. energy firms reduced the number of active oil and natural gas rigs for the second consecutive week, according to the latest report from energy services company Baker Hughes.
The total rig count fell by one to 587 for the week ending September 27, marking the lowest level since early September and representing a 6 percent decrease compared to the same time last year.
Changes in oil and gas rig activity
Baker Hughes reported a drop in the number of oil rigs by four, bringing the total to 484, while gas rigs increased by three to reach 99, their highest level since late July.
This marked the first reduction in oil rigs since mid-August and the largest cut since late June. Despite the weekly decline, oil rigs have seen a net increase for three consecutive months, the first time this has happened since July 2022.
According to Reuters, in the third quarter, U.S. drillers added six oil and gas rigs, boosting the overall rig count for the first time since 2022. However, the rig count has fallen about 20 percent in 2023 after rising 33 percent in 2022 and 67 percent in 2021, largely due to declining oil and gas prices, increased labor and equipment costs from inflation, and a focus on debt reduction and shareholder returns rather than expanding production.
Production and market outlook
Despite the falling rig count and lower oil prices, U.S. crude output is expected to rise, with projections from the U.S. Energy Information Administration (EIA) suggesting an increase from 12.9 million barrels per day (bpd) in 2023 to 13.3 million bpd in 2024 and 13.7 million bpd in 2025.
On the natural gas side, some producers reduced their drilling budgets earlier in the year after monthly average spot prices at the U.S. Henry Hub benchmark in Louisiana plummeted to a 32-year low in March.
This has led to a projected decline in U.S. gas output to 103.4 billion cubic feet per day (bcfd) in 2024, down from a record 103.8 bcfd in 2023, which would be the first annual decrease since the COVID-19 pandemic impacted demand in 2020.
