By Scott DiSavino

(Reuters) – U.S. energy firms this week cut the variety of oil and natural gas rigs operating for a 3rd week in a row to the bottom since December 2021, energy services firm Baker Hughes said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, fell by 4 to 576 within the week to Jan. 24.

Baker Hughes said this week’s decline puts the entire rig count down 45, or 7% below this time last 12 months.

Baker Hughes said oil rigs fell by six to 472 this week, their lowest since December 2021, while gas rigs rose by one to 99.

Within the Permian Basin in West Texas and eastern Latest Mexico, the nation’s biggest oil-producing shale basin, the rig count fell by six within the week to 298, the bottom since February 2022.

That six-rig decline within the Permian was the largest weekly drop since August 2023.

The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on paying down debt and boosting shareholder returns slightly than raising output.

Although analysts forecast U.S. spot crude prices could decline for a 3rd 12 months in a row in 2025, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.6 million bpd in 2025.

On the gas side, the EIA projected a 43% increase in spot gas prices in 2025 would prompt producers to spice up drilling activity this 12 months after a 14% price drop in 2024 caused several energy firms to chop output for the primary time for the reason that COVID-19 pandemic reduced demand for the fuel in 2020. [NGAS/POLL]

The EIA projected gas output would rise to 104.5 billion cubic feet per day (bcfd) in 2025, up from 103.1 bcfd in 2024 and a record 103.6 bcfd in 2023.

(Reporting by Scott DiSavino; Editing by Marguerita Choy)