U.S. energy firms this week cut the number of oil and natural gas rigs operating for the fifth time in six weeks, energy services firm Baker Hughes said in its report on July 12.

The oil and gas rig count, an early indicator of future output, fell by one to 584 in the week to July 12. 

Baker Hughes said that puts the total rig count down 91 rigs, or 13%, below this time last year.

Baker Hughes said oil rigs fell by one to 478 this week, their lowest since December 2021, while gas rigs fell by one to 100.

The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to a decline in oil and gas prices, higher labor and equipment costs from soaring inflation and as companies focused on paying down debt and boosting shareholder returns instead of raising output.

U.S. oil futures are up about 16% so far in 2024 after dropping by 11% in 2023, while U.S. gas futures are down about 7% so far in 2024 after plunging by 44% in 2023.

That increase in oil prices should encourage drillers to boost U.S. crude output from a record 12.9 MMbbl/d in 2023 to 13.3 MMbbl/d in 2024 and 13.8 MMbbl/d in 2025, according to the latest U.S. Energy Information Administration (EIA) outlook.

A decline in gas prices to 3-1/2-year lows in February and March encouraged several producers to reduce spending on drilling activities.

That drilling decline should cause U.S. gas output to slide to 103.5 Bcf/d in 2024, down from a record high of 103.8 Bcf/d in 2023, according to the EIA.