U.S. energy companies trimmed their active drilling fleet this week, marking the first weekly decrease after a six-week streak of gains, according to data released by Baker Hughes for the week ending July 24.
The combined oil and gas rig count declined by one to 587, a level described as the lowest since mid-July. Industry watchers often treat the rig count as an early gauge of future production capacity.
Despite the small weekly drop, the total number of rigs remains elevated compared with a year earlier - up 45 rigs, or 8%, from the same period last year.
Broken down by fuel type, oil-directed rigs fell by two to 450, which the data classify as the lowest oil-rig tally since mid-July. Conversely, gas-directed rigs increased by one to 127, reaching the highest gas-rig total since mid-May. Miscellaneous rigs held steady at 10.
Looking at the trajectory over recent years, the industry has seen cumulative decreases in the oil and gas rig count - down 7% in 2025, down 5% in 2024, and down 20% in 2023. Baker Hughes links those reductions to a lower U.S. oil price environment during those years, which prompted energy companies to favor returning capital to shareholders and reducing debt rather than expanding production.
Turning to price and production expectations, forecasts suggest a reversal in price trends after recent declines. U.S. West Texas Intermediate crude prices are expected to rise in 2026 due in part to supply disruptions from the U.S.-Israeli war on Iran, following price declines in 2023, 2024, and 2025. Alongside these price expectations, the U.S. Energy Information Administration projects crude oil output to climb from a record 13.6 million barrels per day in 2025 to 13.8 million barrels per day in 2026.
Context and implications
The one-rig decline this week constitutes a modest shift in drilling activity but interrupts a multi-week run of increases. The split between oil and gas rig movements - oil down and gas up - highlights differing operational decisions across producers in response to price signals and corporate priorities.
While the weekly change is small, the multi-year declines and the EIA's production projection for 2026 are relevant for market participants tracking supply trends and capital allocation in the energy sector.