Oil rig count drops by three to 439, while production increases to 13.43 million bpd

    by VT Markets
    /
    Jun 14, 2025
    This week, the Baker Hughes rig count for oil dropped by three, leaving 439 active oil rigs. The natural gas rig count also fell by one, bringing the total to 113. In total, there are four fewer rigs this week, giving us a combined rig count of 555. Compared to last year, there are 46 fewer oil rigs, a decrease of 9.5% from 485 rigs.

    US Oil Production Growth

    Even with fewer rigs, US oil production has increased to 13.43 million barrels per day. This is up from 13.10 million barrels per day last year, showing a growth of 2.5%. So, let’s break this down. We see a decrease in the number of active drilling rigs, down from 485 last year to 439 now, which is a significant drop of about 9.5%. However, US oil output is rising, currently at 13.43 million barrels per day, compared to 13.10 million barrels per day last year. This indicates a 2.5% increase in production. This trend suggests that drillers are producing more oil with fewer rigs. This improvement is likely due to better efficiency brought about by newer technology, more productive wells, or focusing on proven areas—likely a combination of these factors. While the number of natural gas rigs is also declining, the main focus remains on crude oil for now. We should also consider how these changes impact price expectations. Typically, a drop in rig counts might signal supply issues and potential price hikes, but current data doesn’t support that idea. Steady production growth contradicts this expectation. This insight should caution anyone looking to invest based solely on anticipated supply constraints.

    Rig Count Implications

    It’s important to know that the efficiency improvements we are seeing won’t last forever. Eventually, having fewer rigs may put real pressure on production levels. So far, however, productivity per rig is high enough to compensate for the reduced drilling activity. This situation encourages us to rethink how we interpret rig counts. Instead of seeing them as a direct indicator of short-term production, we should pay equal attention to actual supply data. From a strategic perspective, the focus shouldn’t just be on rig counts. The market is currently influenced more by projected supply than by the number of rigs drilling. Even though rig counts are declining, production stability remains strong, which could impact market spreads. We must also consider if this production growth can continue without new investments in drilling. If companies start delaying reinvestment due to price pressures or tighter budgets, we might see a dip in production later. Until that happens, we should be careful not to overestimate immediate supply reductions based solely on rig counts. As supply continues to be active—not just in rig numbers but in production—we need to adjust our strategies accordingly. Margins are still under pressure in some market spreads, and if hedging picks up—especially from producers wanting to secure current prices—it could flatten certain forward market structures. In the short term, we might gain more insights from weekly production reports and storage levels than from rig counts. These details are likely to influence price movements, especially if declines in rig counts start aligning with production decreases—though that hasn’t happened yet. We should closely monitor production efficiency, interest in hedging, and export activity. These factors often hold the key to where volatility might arise next. Create your live VT Markets account and start trading now.

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