The U.S. energy industry is showing signs of resurgence as oil and gas rigs continue to increase, pointing to a potential boost in production. According to the latest report by Baker Hughes, the number of rigs in the U.S. rose by three to 589 in the week ending July 26. This increase, particularly in oil rigs, suggests a positive outlook for the oil and gas sector in the near future. With the U.S. leading global oil production and holding the title of the largest liquefied natural gas exporter, the rising number of rigs bodes well for increased volumes of oil and gas hitting the market.
While the overall trend of rising rig counts is promising, the regional breakdown of figures tells a mixed story. Some regions, such as North Dakota and Montana, saw an increase in rig counts, while the Permian basin, the largest onshore hydrocarbon production basin in the U.S., remained relatively flat. Despite this, the overall increase in rig counts and production is a positive sign for the industry, suggesting that U.S. exploration and production companies are shifting focus towards increasing production rather than just boosting shareholder returns and reducing debt.
The impact of increased U.S. production is not limited to domestic markets, as it is also influencing the global oil market. The rise in non-OPEC oil production, driven largely by the U.S., is expected to contribute to an oil surplus later this year or in the first quarter of 2025. This has led to a decline in oil prices, with oil futures registering their third consecutive weekly loss. However, despite the market challenges, Brent remains in backwardation, indicating that current prices are higher than future prices, suggesting a positive outlook for the industry in the long term.
As the energy industry continues to evolve and adapt to changing market conditions, the U.S. is positioning itself as a key player in global oil and gas production. The increase in rig counts and production levels are indicative of a shift towards higher levels of production, in contrast to the focus on shareholder returns seen in the past. With the U.S. leading in oil production and LNG exports, the industry is poised for growth, despite the challenges posed by market uncertainties and fluctuations in demand.
Overall, the recent data on U.S. rig counts and production levels paint a picture of a recovering energy sector with potential for further growth. The positive trends seen in the industry, particularly in rising rig counts and production levels, suggest that the U.S. energy sector is on track for improvement in the near future. As the global oil market braces for an increase in non-OPEC production, the U.S. is positioned to play a significant role in shaping the industry’s trajectory in the coming months and years.
