U.S. energy firms have resumed cutting the number of oil and natural gas rigs, marking the fifth decrease in six weeks, according to Baker Hughes’ latest report. The total rig count fell by two to 588 for the week ending September 20. This figure is down 42 rigs, or 7%, compared to the same time last year.
The count of oil rigs remained steady at 488, while the number of gas rigs decreased by one to 96. The oil and gas rig count has seen a significant decline of about 20% in 2023, following a substantial increase of 33% in 2022 and 67% in 2021. This downturn is attributed to falling oil and gas prices, rising labor and equipment costs due to inflation, and a shift in focus among companies towards debt repayment and enhancing shareholder returns rather than increasing output.
As of now, U.S. oil futures have risen by approximately 0.6% in 2024, recovering slightly after an 11% drop in 2023. Conversely, U.S. gas futures have decreased by about 4% in 2024, following a dramatic plunge of 44% in 2023.
The CEO of EQT, the largest gas producer in the U.S., anticipates that natural gas prices will remain below $3 per million British thermal units in the near term. EQT had previously reduced production earlier this year due to falling prices but expects production cuts to ease next year as demand for liquefied natural gas exports rises. Other shale gas producers are also scaling back drilling to manage overproduction.