US DRILLERS CUT OIL AND GAS RIGS FOR FIRST TIME IN THREE WEEKS
In the week ending March 8, U.S. energy firms reduced the number of oil and natural gas rigs operating for the first time in three weeks, according to energy services firm Baker Hughes. The oil and gas rig count, which serves as an early indicator of future output, decreased by seven to 622, marking the lowest count since February 16. This puts the total rig count down 124 rigs, or 16.6%, compared to the same time last year. Specifically, U.S. oil rigs declined by two to 504, the lowest since February 23, while gas rigs dropped by four to 115, marking their largest decline since November. The decrease in rig count follows a trend of reduced drilling activity, with the U.S. oil and gas rig count having dropped approximately 20% in 2023, following substantial increases in the preceding years. Factors contributing to this decline include falling oil and gas prices, elevated labor and equipment costs due to inflation, and a strategic shift by companies towards debt reduction and shareholder returns rather than production expansion.
Although U.S. oil futures have seen a 9% increase in 2024 after a 11% decrease in 2023, U.S. gas futures have experienced a contrasting trend, declining by over 27% so far in 2024 following a 44% drop in 2023. Notably, U.S. natural gas output has fallen by approximately 7% over the past month as producers curtailed production in response to plummeting prices. Output in the U.S. Lower 48 states averaged 100.2 billion cubic feet per day (bcfd) in March, down from 104.1 bcfd in February and a record high of 105.5 bcfd in December 2023.
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