SunSirs: The Number of Active Crude Oil and Gas Rigs in the US Increased for the Fourth Time in Five Weeks

On Friday, December 5th, Baker Hughes, a US energy services company, reported in its closely watched report that the number of active oil and gas rigs in the US increased last week, marking the fourth increase in five weeks.

Data showed that the total number of oil and gas rigs, a leading indicator of future production, increased by 5 to 549 in the week ending December 5th, the highest level since late November.

Baker Hughes stated that the number of US oil rigs increased by 6 to 413 last week, the highest since late November; while the number of natural gas rigs decreased by 1 to 139, the lowest level since late November.

In Louisiana, the number of rigs increased by 4 to 46, the highest level since March 2024. In New Mexico, the number of rigs increased by 1 to 107, the highest level since September 2024.

The number of oil and gas drilling rigs declined by approximately 5% in 2024, following a 20% drop in 2023. The low prices of U.S. crude oil and natural gas over the past two years have prompted energy companies to focus more on improving shareholder returns and repaying debt rather than increasing production.

Independent exploration producers tracked by U.S. financial services company TD Cowen indicated plans to cut capital expenditures by approximately 4% in 2025 compared to 2024. In contrast, capital expenditures were essentially flat year-on-year in 2024, while increases were 27%, 40%, and 4% in 2023, 2022, and 2021, respectively.

Despite analysts predicting a third consecutive year of decline in U.S. spot crude oil prices in 2025, the U.S. Energy Information Administration (EIA) projects crude oil production to rise from a record 13.2 million barrels per day in 2024 to approximately 13.6 million barrels per day in 2025.

Regarding natural gas, the EIA forecasts a 58% increase in spot gas prices in 2025, which will prompt producers to increase drilling activity this year. Previously, a 14% drop in gas prices in 2024 led several energy companies to cut production for the first time since the COVID-19 pandemic caused a decline in fuel demand in 2020.

The EIA forecasts that natural gas production will increase from 103.2 billion cubic feet per day in 2024 to 107.7 billion cubic feet per day in 2025, after reaching a record high of 103.6 billion cubic feet per day in 2023.

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