US drillers have cut oil and natural gas rigs in the third week of a row, according to Baker Hughes
Baker Hughes, a leading energy services company, said that the U.S. firms have cut back on the number of natural gas and oil rigs for the third consecutive week for the first since mid-April.
The number of oil and gas drilling rigs, a good indicator of future production, dropped by two in the week ending May 16 to 576, the lowest level since January.
Baker Hughes reported that the rig count was down 28 rigs or 5% from this time last week.
Baker Hughes reported that oil rigs dropped by one to 473 in the past week, which is their lowest level since January. Gas rigs also fell, by one to 100, marking their first decline since early April.
Drillers in the Permian Basin, located in West Texas and Eastern New Mexico, have cut three drilling rigs. This brings the total to 282, which is the lowest level since November 2021.
Drillers in New Mexico have cut two drilling rigs. The total is now 94. This is the lowest level since February 2022.
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 increasing production.
TD Cowen, a U.S.-based financial services company, said that the independent exploration and production companies (E&Ps) it tracks plan to reduce capital expenditures by around 3% in 2025 compared to 2024.
This compares to spending that is roughly flat in 2024 and increases of 27%, 40%, and 44% in 2022, as well as a flattish level in 2023.
The U.S. Energy Information Administration, however, projected that crude production would increase from a record 13,2 million barrels per daily (bpd), in 2024, to around 13,4 million bpd by 2025.
The increase in U.S. oil production was, however, lower than the EIA's April forecast due to lower oil prices as U.S. president Donald Trump's tariffs on trade increase the likelihood of a weaker global economy and oil demand.
EIA predicted an 88% increase for spot gas
EIA predicted that gas production would increase to 104.9 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 set in 2023. (Reporting and editing by Chizu Nomiyama; Scott DiSavino)
(source: Reuters)
