Baker Hughes reports that US oil and gas drillers have cut back on rigs in the US for the first time in 3 weeks.
Baker Hughes, a leading energy services company, said that the U.S. oil and gas companies have cut back on the number of rigs for the first time since three weeks.
The number of oil and gas drilling rigs, a good indicator of future production, dropped by four in the week ending October 31 to 546, the lowest level since September.
Baker Hughes reported that the total number of rigs is down 39, or 7% from this time last.
The report said that oil rigs dropped by six this week to 414, their lowest since September. Gas rigs, on the other hand, rose by four, to 125, which is their highest level since August 2023.
Oil and gas rig counts are expected to decline by 5% and 20% respectively in 2024, as the lower U.S. gas and oil prices in recent years have prompted energy companies to concentrate more on increasing shareholder returns and paying off debt than on increasing production.
The independent exploration companies (E&Ps) tracked by U.S. Financial Services firm TD Cowen have said that they plan to reduce capital expenditures in 2025 by approximately 3% 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, crude production would increase from a record 13,2 million barrels a day (bpd).
EIA predicted that a 56% rise in gas spot prices in 2025 will prompt producers to increase drilling activity in this year. A 14% drop in price in 2024 had caused several energy companies 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 107.1 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 from Scott DiSavino, New York; editing by Matthew Lewis.)
(source: Reuters)