Baker Hughes: US drillers have cut oil and gas rigs four times in the last five weeks.

Baker Hughes, a leading energy services company, said that the U.S. firms cut back on the number of natural gas and oil rigs for the fourth consecutive week in its widely read report. The number of oil and natural gas rigs, a good indicator of future production, dropped by one in the week ending August 22. This is the lowest level since mid-July. Baker Hughes reported that oil rigs dropped by one this week to 411, while gas-rigs remained at 122.

Oil and gas rig counts declined by around 5% in 2020 and 20% in 2023, as lower U.S. gas and oil prices in the last couple of years led energy firms to place more emphasis on increasing shareholder returns and paying off debt than increasing production. The U.S. financial firm TD Cowen tracked independent exploration and production companies (E&P), which said that they would cut capital expenditures in 2025 by 4% from the levels in 2024.

This compares to roughly flat spending year-over-year in 2024 and increases of 27%, 40%, and 4%, respectively, in 2023. Analysts predicted that U.S. crude spot prices would fall for the third consecutive year in 2025. However, according to the U.S. Energy Information Administration's (EIA), crude production would increase from a record 13,2 million barrels a day (bpd).

EIA predicted a 65% rise in spot gas Prices in 2025 will prompt producers to increase drilling activity in this year. A 14% drop in price in 2024 forced several energy firms in the US to reduce output for the very first time since 2020, when the COVID-19 Pandemic reduced the demand for fuel. EIA predicted that gas production would increase to 106.4 billion cubic feet per day in 2025. This is up from 103.2 billion cubic foot per day in 2024, and a record high of 103.6 bcfd for 2023. Reporting by Scott DiSavino, Editing by ChizuNomiyama

(source: Reuters)