This week, U.S. energy companies added new oil and natural gas rigs for the third time in four weeks, energy services company Baker Hughes said in its widely watched report on Friday.

The number of oil and gas rigs, an early indicator of future production, rose by two to 588 in the week ended August 9.

Despite the increase in rigs this week, Baker Hughes said the total is still 66 rigs lower, or 10% below the same period last year.

According to Baker Hughes, the oil rig count rose by three to 485 this week, while the gas rig count fell by one to 97.

The number of oil and gas rigs declined about 20% in 2023 after increasing 33% in 2022 and 67% in 2021. This was due to falling oil and gas prices, higher labor and equipment costs due to rising inflation, and the fact that companies focused on paying down debt and increasing shareholder returns rather than increasing production.

US oil futures CLc1 are up about 7% so far in 2024 after falling 11% in 2023, while US gas futures NGc1 are down about 15% so far in 2024 after plunging 44% in 2023.

This rise in oil prices is expected to encourage oil drillers to increase their production of crude oil in the U.S. from a record 12.9 million barrels per day (bpd) in 2023 to 13.2 million bpd in 2024, according to the latest forecast from the U.S. Energy Information Administration (EIA).

On the gas side, several producers reduced their spending on drilling activities at the beginning of the year after prices fell to a three-and-a-half-year low in February and March.

This decline in production is expected to cause U.S. gas production to decline from a record high of 103.8 bcfd in 2023 to 103.3 billion cubic feet per day (bcfd) in 2024, according to the EIA.

(Reuters – Reporting by Scott DiSavino and Brijesh Patel; Editing by Marguerita Choy)