According to the closely watched report released by energy services company Baker Hughes on Friday, U.S. energy firms added oil and natural gas rigs for the second consecutive week.
This marks the first time this has happened since November. The count of oil and gas rigs, which serves as an early indicator of future output, increased by four to 758 in the week ending March 24. Baker Hughes also stated that the current total rig count is up 88, or 13%, compared to this time last year.
The number of U.S. oil rigs rose by four to 593 this week, marking the first increase in six weeks, while gas rigs remained unchanged at 162.
After experiencing a gain of 7% in 2022, U.S. oil futures have fallen approximately 14% this year. U.S. gas futures, on the other hand, have decreased by about 51% this year after a 20% rise in the previous year.
The decline in energy prices has led to several exploration and production companies reducing the number of rigs used for oil and gas drilling for three consecutive months between December and February.
Energy analysts predict that such a significant shift in prices, along with already high well costs that have risen by around 30% since 2021, will result in a slowdown in drilling and completion activity in U.S. onshore natural gas basins. These observations were made by analysts at the energy consulting firm, Rystad Energy.
Despite an increase in the gas rig count since the beginning of the year, analysts have noted that drillers are reducing the number of rigs in some shale basins, particularly the Haynesville located in Arkansas, Louisiana, and Texas due to its comparatively higher production costs.
Over the past four weeks, the number of active rigs in Haynesville has decreased to 67, down from 72 at the end of 2022.
