U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second week in a row, energy services firm Baker Hughes said in its closely followed report on Jan. 12.

The oil and gas rig count, an early indicator of future output, fell by two to 619 in the week to Jan. 12, the lowest since November.

Baker Hughes said U.S. oil rigs fell by two to 499 this week, while gas rigs decreased by one to 117.

The U.S. rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due mostly to a drop in oil and gas prices, higher drilling costs and as companies cut spending in favor of boosting returns to shareholders.

U.S. oil futures were up 1% so far in 2024 after dropping by 11% in 2023. U.S. gas futures, meanwhile, were up 32% so far in 2024 after plunging by 44% in 2023.

Fourteen of the independent exploration and production (E&P) companies tracked by U.S. financial services firm TD Cowen said they planned to cut spending by around 4% in 2024 versus 2023.

In 2023, 25 of the E&Ps TD Cowen tracks said they planned to raise spending by around 20% versus the prior year after boosting spending about 40% in 2022 and 4% in 2021.

Despite lower prices, spending and rig counts, U.S. oil and gas output was still on track to hit record highs in 2024 and 2025 due to efficiency gains and as firms complete work on already drilled wells.

The total number of drilled but uncompleted (DUC) wells remaining dropped to a record low of 4,415 in November, according to federal energy data going back to December 2013.

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