U.S. energy firms this week cut the number of oil and natural gas rigs operating for an 11th week in a row for the first time since July 2020 when the COVID-19 pandemic cut demand for the fuel, energy services firm Baker Hughes said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, fell by two to 537 in the week to July 11, the lowest since October 2021.

Baker Hughes said this week’s decline puts the total rig count down 47 rigs, or 8% below this time last year.

Baker Hughes said oil rigs fell by one to 424 this week, their lowest since September 2021, while gas rigs were unchanged at 108.

In Texas, the biggest oil and gas producing state, the rig count fell by one to 255, the lowest since November 2021.

But in the Haynesville shale in Arkansas, Louisiana and Texas, one of the nation’s biggest and fastest growing gas producing regions, the rig count rose by one to 38, the most since March 2024.

The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on boosting shareholder returns and paying down debt rather than increasing output.

The independent exploration and production (E&P) companies tracked by U.S. financial services firm TD Cowen said they planned to cut capital expenditures by around 3% in 2025 from levels seen in 2024.

That compares with roughly flat year-over-year spending in 2024, and increases of 27% in 2023, 40% in 2022 and 4% in 2021.

Even though analysts forecast U.S. spot crude prices would decline for a third year in a row in 2025, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.4 million bpd in 2025.

On the gas side, the EIA projected a 68% increase in spot gas (NG-W-HH-SNL) prices in 2025 would prompt producers to boost drilling activity this year after a 14% price drop in 2024 caused several energy firms to cut output for the first time since the COVID-19 pandemic reduced demand for the fuel in 2020.

The EIA projected gas output would rise to 105.9 billion cubic feet per day (bcfd) in 2025, up from 103.2 bcfd in 2024 and a record 103.6 bcfd in 2023.

Source: Reuters