U.S. energy firms cut oil drilling rigs by seven units this week, marking the largest weekly decline since June 2023, according to Baker Hughes. The total count of active oil and natural gas rigs now stands at 583, down for the third consecutive week. This figure represents a 6% decrease year-over-year, with the total number of rigs 34 fewer than in April 2024.
The oil rig count dropped by nine to 480, while gas rigs edged up by one to 97. Analysts view these rig counts as forward-looking indicators of energy production, and the latest data suggests a cautious industry stance amid uncertain pricing dynamics.
In the Permian Basin—the U.S.’s most prolific oil-producing shale region—the rig count slipped by five, dropping to 289, the lowest level since December 2021.
Market Factors Behind the Decline
Multiple economic signals are influencing the rig slowdown. Despite crude production reaching a record 13.2 million barrels per day (bpd) in 2024, energy firms are scaling back on drilling amid price volatility and strategic capital allocation.
- U.S. crude output forecast for 2025: 13.5 million bpd
- EIA downward revision: Reflects weaker price outlook and global demand risks
- Permian oil output expected to fall from 6.57 million bpd in March to 6.51 million bpd in April
The downward adjustment in production forecasts is partly due to global economic headwinds, including tariff escalations introduced by President Trump. These moves could dampen global growth and energy demand, leading to more conservative output planning by U.S. producers.
Natural Gas Outlook Turns More Optimistic
While oil drilling contracts, natural gas may see a resurgence. The U.S. Energy Information Administration (EIA) expects spot gas prices to rise 95% in 2025, a reversal from the 14% price drop seen in 2024. That price rebound is anticipated to spur renewed drilling activity.
- 2024 gas output estimate: 103.2 billion cubic feet/day (bcfd)
- 2025 forecast: 105.3 bcfd
- Record output in 2023: 103.6 bcfd
The recent gas production cuts—first since the COVID-19 demand collapse in 2020—are expected to reverse if pricing incentives materialize. Industry players are eyeing long-term profitability, cautiously balancing investment against demand recovery projections.
As rig counts drop and forecasts shift, investors and policymakers alike will monitor upcoming production data for clues on where U.S. energy markets are heading next.