U.S. energy firms this week cut the number of oil and natural gas rigs operating for the second time in three weeks, energy services firm Baker Hughes said in its closely followed report on Feb. 16.

The oil and gas rig count, an early indicator of future output, fell by two to 621 in the week to Feb. 16.

Baker Hughes said that puts the total rig count down 139, or 18% below this time last year.

Baker Hughes said U.S. oil rigs fell two to 497 this week, while gas rigs were unchanged at 121.

The U.S. 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 more on shareholder payouts than on new drilling projects.

U.S. oil futures were up about 10% so far in 2024 after dropping by 11% in 2023. U.S. gas futures, meanwhile, were down about 37% so far in 2024 after plunging by 44% in 2023.

Oil majors are targeting new oilfields that can be profitable even if crude prices fall to about $30/bbl, using a third year of rising demand to reshape portfolios amid uncertainty over the industry's future.

Meanwhile, some gas producers said they would slash spending and reducing drilling activity following a sharp decline in prices to a 3-1/2-year low this week. Analysts, however, noted those rig reductions would likely not show up in the data for a few months.

Nineteen of the independent E&P companies tracked by U.S. financial services firm TD Cowen said they planned to cut spending by around 3% in 2024 versus 2023.

In 2023, 25 of the E&Ps TD Cowen tracks said they planned to raise spending by around 27% versus the prior year after boosting spending about 40% in 2022 and 4% in 2021.