U.S. energy firms this week added oil and natural gas rigs for the first time in seven weeks, energy services firm Baker Hughes said in its closely followed report on Friday.
The oil and gas rig count, an early indicator of future output, rose by four to 585 in the week to July 5.
Despite this week’s rig increase, Baker Hughes said the total count was still down 95 rigs, or 14%, below this time last year.
Baker Hughes said oil rigs were unchanged at 479 this week, holding at its lowest since December 2021, while gas rigs rose by four to 101.
The oil and gas rig count dropped about 20% in 2023 after rising by 33% in 2022 and 67% in 2021, due to a decline in oil and gas prices, higher labor and equipment costs from soaring inflation and as companies focused on paying down debt and boosting shareholder returns instead of raising output.
U.S. oil futures were up about 18% so far in 2024 after dropping by 11% in 2023, while U.S. gas futures were down about 6% so far in 2024 after plunging by 44% in 2023.
That increase in oil prices should encourage drillers to boost U.S. crude output from a record 12.9 million barrels per day (bpd) in 2023 to 13.2 million bpd in 2024 and 13.7 million bpd in 2025, according to the latest U.S. Energy Information Administration (EIA) outlook.
Even though gas futures were trading higher now, several producers reduced spending on drilling activities earlier in the year after prices drop to 3-1/2-year lows in February and March.
That drilling decline should cause U.S. gas output to slide to 102.1 billion cubic feet per day (bcfd) in 2024, down from a record high of 103.8 bcfd in 2023, according to the EIA.