U.S. energy firms this week cut the number of oil and natural gas rigs operating for a fourth week in a row, bringing the count to the lowest since November, 2021, energy services firm Baker Hughes said in its closely followed report on May 23.

The oil and gas rig count, an early indicator of future output, fell by 10 to 566 in the week to May 23. 

It was the first time since September 2024 that drillers have reduced the number of rigs four weeks in a row.

Baker Hughes said this week's decline puts the total rig count down 34, or 6%, from the same time last year.

Baker Hughes said oil rigs fell by eight to 465 this week, their lowest since November 2021. Gas rigs fell by two to 98, their lowest since last month.

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.

The independent E&P companies tracked by U.S. financial services firm TD Cowen said they planned to cut capital expenditures by around 3% in 2025 from levels seen in 2024.

That compares with roughly flat year-over-year spending in 2024, and increases of 27% in 2023, 40% in 2022 and 4% in 2021.

Even though analysts forecast U.S. spot crude prices would decline in 2025 for a third year in a row, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 MMbbl/d in 2024 to around 13.4 million bpd in 2025.

On the gas side, EIA projected an 88% 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. 

EIA projected gas output would rise to 104.9 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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