Oil Drilling Climbs Despite Overall Rig Count Drop
U.S. energy firms cut the total number of active oil and gas rigs for the second consecutive week, according to Baker Hughes. However, the number of oil rigs rose by five to 489—the highest level since June—underscoring continued strength in the oil sector.
The total rig count, a leading indicator of future production, fell by two to 590 for the week ending April 4. This was driven by a sharp decline in gas rigs, which dropped by seven to 96, marking their lowest level since September and the biggest weekly drop since May 2023.
Oil Sector Remains Resilient Amid Price Pressure
The oil and gas rig count declined 5% in 2024 and 20% in 2023 as energy firms prioritized shareholder returns and debt reduction over expanding output. Despite these reductions, the oil sector is showing resilience. U.S. oil rigs continue to climb, indicating that producers are staying active even as crude prices are forecast to fall for a third year in 2025.
The U.S. Energy Information Administration (EIA) expects crude output to increase from 13.2 million barrels per day (bpd) in 2024 to 13.6 million bpd in 2025, maintaining the U.S.’s position as a leading global oil producer.
Gas Drilling Suffers Amid Weak Prices
Natural gas drilling tells a different story. Following a 14% drop in gas prices in 2024, several producers pulled back operations—the first such cut since the pandemic-induced demand collapse of 2020. The number of active gas rigs now stands at 96, reflecting caution in the sector.
However, the outlook for 2025 is more optimistic. The EIA projects a 91% increase in spot gas prices, which could reverse this year’s downturn and spur more gas drilling activity across key production basins.
Output Projections for 2025 Remain Strong
Despite volatility in rig counts, U.S. energy output is expected to rise. According to the EIA:
- Crude oil production is forecast to reach 13.6 million bpd in 2025.
- Gas output is projected at 105.2 billion cubic feet per day (bcfd), up from 103.2 bcfd in 2024 and a record 103.6 bcfd in 2023.
These projections indicate that U.S. energy dominance will persist, with strategic shifts between oil and gas based on price dynamics and investor priorities.