US energy companies added oil and natural gas drilling rigs for the third time in four weeks, energy services company Baker Hughes reported on Friday. The number of oil and gas installations, an early indicator of future production, doubled to 588 during the week of August 9.
Despite the increase in rig count this week, Baker Hughes noted that the total number of rigs was still down 66, or 10% less than this time last year. The number of oil drilling rigs increased from three to 485 this week, while the number of gas drilling rigs fell from one to 97.
The number of oil and gas drilling rigs fell by about 20% in 2023, after increasing by 33% in 2022 and 67% in 2021. This decline was attributed to lower oil and gas prices, rising labor and equipment costs due to inflation, and a shift in corporate focus towards reducing debt and increasing shareholder returns rather than boosting production.
US oil futures have climbed by approximately 7% so far in 2024, after falling 11% in 2023, while US gas futures have declined by about 15% in 2024, following a 44% plunge in 2023.
The anticipated rise in oil prices is expected to incentivize drillers to increase US crude oil production to a record 13.2 million barrels per day (bpd) in 2024, up from 12.9 million bpd in 2023. However, for gas, some producers reduced spending on drilling earlier this year when prices slumped to three-and-a-half-year lows in February and March.
This reduction in drilling activity is projected to lead to a decrease in US gas production to 103.3 billion cubic feet per day (bcfd) in 2024, down from 103.8 bcfd in 2023.