Breaking News: U.S. Energy Firms Slash Oil and Gas Rigs for Third Consecutive Week, Lowest Count Since December 2021
By Scott DiSavino
In a significant development, U.S. energy firms have reduced the number of oil and gas rigs operating for the third week in a row, reaching the lowest count since December 2021, according to the latest report from Baker Hughes (NASDAQ:). The oil and gas rig count, which serves as an early indicator of future output, dropped by four to 576 in the week ending January 24.
Baker Hughes reported that the total rig count is down 7% from the same time last year, with oil rigs decreasing by six to 472, marking their lowest count since December 2021. In contrast, gas rigs saw a slight increase of one, reaching a total of 99.
Notably, in the Permian Basin, the largest oil-producing shale basin in the nation located in West Texas and eastern New Mexico, the rig count fell by six to 298, the lowest count since February 2022. This decline in the Permian marks the most substantial weekly drop since August 2023.
Over the past few years, the oil and gas rig count has seen a decline of approximately 5% in 2024 and 20% in 2023, as lower oil and gas prices in the U.S. have led energy companies to prioritize debt reduction and shareholder returns over output expansion.
Despite analysts predicting a potential third consecutive year of declining U.S. spot crude prices in 2025, the U.S. Energy Information Administration (EIA) forecasts an increase in crude output from a record 13.2 million barrels per day (bpd) in 2024 to around 13.6 million bpd in 2025.
On the gas front, the EIA anticipates a 43% rise in spot gas prices in 2025, prompting producers to ramp up drilling activity this year. This comes after a 14% price drop in 2024 led several energy firms to cut output for the first time since the COVID-19 pandemic impacted demand in 2020. Gas output is projected to increase to 104.5 billion cubic feet per day (bcfd) in 2025, up from 103.1 bcfd in 2024 and a record 103.6 bcfd in 2023.