US Energy Rig Count Rises for First Time in Three Weeks

Key Takeaways on Rig Count

U.S. energy firms increased the number of active oil and natural gas rigs for the first time in three weeks. The total rig count rose by one to 544 in the week ending January 23, according to a report from energy services firm Baker Hughes.

Current Situation Overview

Despite the minor weekly increase, the total rig count remains significantly lower than the previous year, standing 32 rigs, or 5.6%, below the same period last year. Specifically, oil rigs increased by one to 411, while gas rigs remained unchanged at 122. This data reflects a broader trend of reduced drilling activity, with rig counts declining by approximately 20% in 2023 as companies prioritized shareholder returns and debt reduction over expanding production.

Impact on the Energy Market

The consistent reduction in drilling activity signals a cautious approach from U.S. energy producers. The U.S. Energy Information Administration projects that domestic crude oil output will slightly decrease from a record 13.61 million barrels per day in 2025 to 13.59 million bpd in 2026. This restrained production outlook could lend support to crude prices, as supply growth is not expected to accelerate despite minor weekly fluctuations in rig activity.

Summary and Outlook

While the first weekly increase in three weeks is a notable event, the overarching trend points towards disciplined capital spending in the U.S. energy sector. The market will continue to monitor rig count data as an early indicator of future production, but projections suggest output will remain relatively flat, marking a shift from previous years of aggressive growth.

**FAQ**

Q: What does the latest Baker Hughes report indicate?
A: It shows a one-rig increase in the U.S. oil and gas count to 544, the first rise in three weeks, though the count is still down 5.6% year-over-year.

Q: Why has the rig count been declining over the long term?
A: U.S. energy firms have been reducing drilling to focus on increasing shareholder returns and paying down debt rather than aggressively expanding production.

Q: What is the forecast for U.S. crude oil production?
A: The U.S. EIA projects that crude output will see a slight decrease from 2025 to 2026, suggesting a stabilization of production levels.

Source: Investing.com