Baker Hughes (BKR.O), a prominent energy services firm, reported that U.S. energy companies decreased the count of oil rigs for the eighth consecutive month in July, while they expanded the number of natural gas rigs for the first time in three months. This information was part of their highly anticipated Friday report.
For the third week in a row, the number of operational oil and gas rigs has been reduced.
The oil and gas rig count, a preliminary gauge of future production, slipped by five to 664 in the week ending July 28. This is the lowest it’s been since March 2022.
Baker Hughes noted a 13% decline in the total rig count from the same period last year, a decrease of 103 rigs.
This week saw a drop in U.S. oil rigs to their lowest since March 2022, from 530 to 529, and a decrease of three in gas rigs to 128.
The total number of oil and gas rigs decreased by 10 in July, marking the smallest decline witnessed over the past three months.
Oil rigs were reduced by 16 units in July, which means there has been a decline in oil rig counts for the eighth consecutive month, the first occurrence of this since the record 12-month streak that ended in November 2019. Conversely, gas rigs saw an increase of four units in July, their first increase in three months.
So far this year, U.S. oil futures have decreased by around 1%, following a rise of about 7% in 2022. U.S. gas futures have plummeted by around 42% after experiencing a rise of approximately 20% last year.
The top two U.S. producers, Exxon Mobil (XOM.N) and Chevron (CVX.N), have seen their profits fall by around half from their 2022 high points due to weaker prices. Despite this, they have maintained their cash distribution programs, choosing to prioritize shareholder repayment over capital spending. Oilfield service providers, on the other hand, have indicated a potential rig count recovery later this year, driven by an increase in oil and gas prices.
Despite the decreased prices, particularly of gas, U.S. crude production is expected to increase from 11.9 million barrels per day (bpd) in 2022 to 12.6 million bpd in 2023 and further to 12.9 million bpd in 2024, according to the U.S. Energy Information Administration’s (EIA) July projections. This is in comparison with a record 12.3 million bpd in 2019.
Similarly, U.S. gas production is forecasted to increase from a record 98.13 billion cubic feet per day (bcfd) in 2022 to 102.35 bcfd in 2023 and slightly up to 102.40 bcfd in 2024, as per EIA’s projection.
