U.S. energy companies have reduced the number of operational oil and natural gas rigs for a fourth consecutive month, reaching their lowest levels since October 2021, according to a report from Baker Hughes. In the week ending June 27, the total count fell by seven to 547 rigs. This decline represents a reduction of 34 rigs, or 6%, compared to the same time last year. Specifically, the oil rig count decreased by six to 432, marking another low since October 2021, while gas rigs fell by two to reach 109.
In the prominent Permian Basin, which spans West Texas and eastern New Mexico, one rig was cut, bringing the total to 270, a figure not seen since October 2021. Additionally, Wyoming experienced a significant drop, losing five rigs this week, resulting in a total of 18, the lowest since January. This five-rig loss is the most substantial weekly reduction since 2020. Throughout June, energy producers cut 16 oil and gas rigs, marking the first four-month decline since June 2024.
Overall, the rig count has seen decreases of about 5% in 2024 and 20% in 2023, attributed to lower oil and gas prices. This pricing environment has driven companies to prioritize shareholder returns and debt reduction over increased output. Looking ahead, independent exploration and production companies monitored by TD Cowen plan to reduce capital expenditures by approximately 3% in 2025 compared to 2024. This follows a period of notable capital spending increases in previous years.
Despite forecasts predicting a decline in U.S. spot crude prices for three consecutive years, the U.S. Energy Information Administration (EIA) anticipates an increase in crude output to around 13.4 million barrels per day in 2025, up from 13.2 million bpd in 2024. Meanwhile, on the gas front, projected price increases may encourage a boost in drilling activities.