Energy services provider Baker Hughes (BKR.O), opening a new tab stated in its widely watched report on Friday that U.S. energy companies reduced the number of oil and natural gas rigs operating this week to the lowest since January 2022. In the week ending June 7, the number of oil and gas rigs declined by six to 594, marking the second decline in the previous three weeks. This number is considered an early predictor of future output.
According to Baker Hughes, it means there are 101 fewer rigs overall than there were at this time last year, or 15% fewer. Oil rig counts decreased by four to 492 last week, the lowest since January 2022, according to Baker Hughes, while gas rig counts fell by two to 98, the lowest since October 2021. Drillers removed one rig in West Virginia, leaving just five operational units the fewest since August 2020.
The largest gas-producing area in the country, the Marcellus Shale in Pennsylvania, West Virginia, and Ohio, saw a two-rig decline to 25, the lowest since December 2020. The number of oil and gas rigs decreased by roughly 20% in 2023 after increasing by 33% in 2022 and 67% in 2021. This was because of falling oil and gas prices, increased labor and equipment expenses brought on by skyrocketing inflation, and businesses prioritized paying off debt and growing shareholder returns above increasing output.
U.S. petrol futures were up roughly 16% so far in 2024 after falling by 44% in 2023, while U.S. oil futures were up roughly 6% so far in 2024 after falling by 11% in 2023. Saudi Arabia is expected to generate more than $11.2 billion by selling more shares in the massive oil corporation Aramco on Friday, providing additional funding for the country’s planned expenditures.
The U.S. Energy Information Administration (EIA) has released an estimate that states that the increase in oil prices could motivate drillers to expand U.S. crude output from a record 12.9 million barrels per day (bpd) in 2023 to 13.2 million bpd in 2024 and 13.7 million bpd in 2025.
While gas futures were now trading higher, earlier in the year, following prices down to 3-1/2-year lows in February and March, numerous producers cut back on drilling operations. The EIA projects that this reduction in drilling will result in a record low of 103.8 billion cubic feet per day (bcfd) in 2023 for U.S. gas output, which will rise to 103.0 bcfd in 2024.
