Why are US energy firms cutting rigs now? Baker Hughes report explained

US energy firms have reduced the number of oil and gas rigs this week ending October 2. Baker Hughes reported that the total rig count decreased by one to 598, which was the lowest since mid-September. Despite the decrease, the rig count was 49 rigs or 9% higher than the same period a year ago as the drop was recorded in gas rigs, while oil rigs increased. The data comes as the US crude and gas production is expected to increase in 2026 despite the changes in the drill rig counts.

Baker Hughes reports first rig decline in six weeks

The total US oil and gas rig count dropped by one to 598 for the week ended October 2, according to Baker Hughes. The drop marks the end of 6 consecutive weeks of increases or no changes in the rig count. The total rig count was at its lowest since mid-September, but it was 49 rigs or 9% higher than the same period a year ago.


The changes in the rig counts were different for oil and gas rigs:

• Oil rigs: Rigs increased by one to 456, the highest since May 2025
• Gas rigs: Rigs dropped by two to 133, the lowest since mid-September
• Other rigs: No changes recorded at 9 rigs

Why are US energy firms cutting rigs now?

US oil and gas rigs dropped by 7% in 2025 following a 5% drop in 2024 and 20% in 2023. The latest drop is closely associated with the gas rigs as oil rigs continue to rise. While the oil rig count increased by one, gas rigs dropped by two for this week.

US crude prices are expected to increase in 2026 for the first time in 4 years as geopolitical conflicts between Iran and Israel impact the supply-demand dynamics. According to the EIA, the US crude production is expected to rise from a record 13.7M bpd in 2025 to 13.8M bpd in 2026.

Natural gas production is also expected to rise as the EIA forecasts an increase from 107.6 billion cubic feet per day in 2025 to 111.7 billion cubic feet per day in 2026. With the demand for electricity rising, natural gas is anticipated to be used in power plants that feed data centers. In addition, it will also be used to produce LNG for export.

What does the rig count mean for US energy output?

The Baker Hughes rig count is an indicator of future production levels, but it does not necessarily reflect the changes in the output. A lower rig count usually means lower production in the future, but it may not always be the case as production may rise due to improved efficiency and higher production from existing rigs. Thus the latest data on drill rigs shows a conflicting trend for the US energy output, with oil production rising, but gas production dropping, and total production expected to rise in 2026.