U.S. energy firms this week cut the number of natural gas rigs operating to the lowest level since January 2022, energy services firm Baker Hughes said in its closely followed report on March 22.

The combined oil and gas rig count, an early indicator of future output, fell by five to 624 in the week to March 22. 

Baker Hughes said that puts the total rig count down 134, or 18%, below this time last year.

The number of oil rigs fell by one to 509 this week, while gas rigs decreased by four to 112, their lowest level since mid-January 2022, according to Baker Hughes.

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 12% so far in 2024 after dropping by 11% in 2023. U.S. gas futures, meanwhile, were down about 34% so far in 2024 after plunging by 44% in 2023.

Amid the increase in crude prices, oil output from top shale-producing regions was expected to rise in April to its highest in four months, the U.S. Energy Information Administration (EIA) said in its monthly Drilling Productivity Report on March 18.

Total gas output in the big shale basins, however, will ease to a three-month low, the EIA said, as some producers slash spending and reduce drilling activities after gas futures plunged to a 3-1/2-year in February.

The EIA said producers drilled 862 oil and gas wells in February and completed 865, the most drilled and completed since December 2023.

Total DUC oil and gas wells slid by three to 4,483 in February, the lowest since DUCs fell to a record low of 4,477 in December 2023, according to EIA data going back to December 2013.

U.S. oil output was still on track to hit record highs in 2024 and 2025 due to efficiency gains and as firms complete work on DUCs.

U.S. gas output in 2024, however, will drop from the record high hit last year, according to the EIA.