US drillers have cut oil and gas drilling rigs in the fourth week of a row, according to Baker Hughes

Baker Hughes, a leading energy services company, said that the U.S. firms have cut back on the number of natural gas and oil rigs for the fourth consecutive week for the first since late June.

The number of oil and gas drilling rigs, a good indicator of future production, dropped by one to 582 during the week ending Sept. 6, which is the lowest level since June.

Baker Hughes reported that oil rigs remained at 483 this past week while gas rigs dropped by one to 94. This is their lowest level since April 2021.

Oil and gas rig counts dropped by about 20% in the year 2023, after increasing by 33% and 67% respectively in 2022, 2021 and 2022. This was due to lower oil and natural gas prices and higher labor and equipment cost from rising inflation, as well as a focus on debt repayment and shareholder returns rather than raising output.

U.S. Oil Futures are down about 6% in 2024, after falling by 11% in the previous year. U.S. Gas Futures are down about 10% in 2024, after plummeting by 44% last year.

Many energy companies cut their capital expenditures in 2024 due to the drop in gas prices for the second consecutive year. This drop in spending would have led to a reduction in gas production for the first since 2020.

The 26 independent exploration companies (E&Ps) tracked by U.S. Financial Services firm TD Cowen have said that they plan to reduce spending by around 2% by 2024 compared to 2023.

This compares to increases in spending of 27% per year in 2023, 40% per year in 2022, and 4% per annum in 2021.

(source: Reuters)