U.S. energy firms this week cut the number of oil and natural gas rigs operating for a second week in a row, even as the number of oil rigs rose to the highest since June, energy services firm Baker Hughes said in its closely followed report on April 4.

The oil and gas rig count, an early indicator of future output, fell by two to 590 in the week to April 4. 

Baker Hughes said oil rigs rose by five to 489 this week, their highest since June, while gas rigs fell by seven, the most in a week since May 2023, to 96, their lowest since September.

The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on boosting shareholder returns and paying down debt rather than increasing output.

Even though analysts forecast U.S. spot crude prices would decline for a third year in a row in 2025, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 MMbbl/d in 2024 to around 13.6 MMbbl/d in 2025.

On the gas side, the EIA projected a 91% increase in spot gas prices in 2025 would prompt producers to boost drilling activity this year after a 14% price drop in 2024 caused several energy firms to cut output for the first time since the COVID-19 pandemic reduced demand for the fuel in 2020.

The EIA projected gas output would rise to 105.2 Bcf/d in 2025, up from 103.2 Bcf/d in 2024 and a record 103.6 Bcf/d in 2023.

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