U.S. energy companies increased their oil and natural gas rigs for the fourth consecutive week, marking the longest streak of additions since February, according to Baker Hughes’ latest weekly report.
The total oil and gas rig count, a key indicator of future production, rose by seven to 549 in the week ending September 26. This is the highest level since June. Despite the recent growth, the overall rig count remains 38 rigs, or about 6%, lower compared to the same period last year.
Baker Hughes reported that oil rigs climbed by six to reach 424, their highest since July, while gas rigs dropped by one to 117, the lowest since July.
In the Permian Basin, the largest U.S. oil-producing shale region spanning West Texas and eastern New Mexico, the rig count slipped by one to 253, the lowest since September 2021. Meanwhile, in the Utica formation across Pennsylvania, Ohio, and West Virginia, the rig count rose by one to 14, the highest since March 2023. Ohio’s rig count also increased by one to 13, its strongest level since February 2024.
Rig activity in the U.S. has been declining in recent years. The oil and gas rig count dropped about 5% in 2024 and 20% in 2023, as lower energy prices led firms to prioritize shareholder returns and debt reduction over higher output.
According to TD Cowen, independent exploration and production (E&P) companies expect to cut capital spending by around 4% in 2025. This follows flat spending in 2024, after sharp increases of 27% in 2023, 40% in 2022, and 4% in 2021.
Looking ahead, analysts forecast U.S. crude prices will fall for a third straight year in 2025. Still, the U.S. Energy Information Administration (EIA) projects oil output will rise from a record 13.2 million barrels per day (bpd) in 2024 to about 13.4 million bpd in 2025.
On the natural gas side, the EIA expects a 61% surge in spot gas prices in 2025, which could encourage producers to increase drilling. This comes after a 14% decline in 2024 forced several companies to cut output for the first time since the COVID-19 pandemic reduced fuel demand in 2020. Gas production is forecast to climb to 106.6 billion cubic feet per day (bcfd) in 2025, up from 103.2 bcfd in 2024 and a record 103.6 bcfd in 2023.
