This week, the Baker Hughes rig count for oil decreased by three, resulting in 439 active oil rigs. The count for natural gas rigs also dropped by one, bringing the total to 113.

Overall, there has been a reduction of four rigs, with the total rig count now at 555. Compared to the previous year, the oil rig count has fallen from 485, showing a decrease of 46 rigs, or 9.5%.

Us Oil Production Growth

Despite this decline in rig numbers, US oil production stands at 13.43 million barrels per day. This marks a rise from about 13.10 million barrels per day a year ago, equating to a 2.5% growth in production.

So, to unpack what’s happening here — we’re looking at a bit of a mismatch. On one hand, the number of active drilling rigs has been falling steadily. We’ve gone from 485 last year to 439 now, which is a notable drop, about 9.5%. On the other hand, actual oil output in the US continues to tick upward. We’re currently sitting at 13.43 million barrels per day, a rise from the 13.10 million barrels per day recorded this time last year, roughly a 2.5% gain. That’s quite telling.

What this means, in clearer terms, is that drillers are extracting more oil using fewer rigs. The only way that’s happening is through better efficiency. Newer technology, more productive wells, or simply narrowing work to more proven zones — likely a mix of all of the above. While natural gas shows a similar downtrend in active rig counts, the focus for most remains firmly on crude oil for now.

As for the ripple effects on our side, let’s not overlook how this dynamic tends to play into price expectations and volatility. With falling rig counts, the intuitive response might be to expect supply constraints and price increases, but the data aren’t quite lining up that neatly. Steady production growth is pushing against that narrative. That alone should give pause to anyone looking to build positions based on tighter near-term supply.

Rig Count Implications

It’s also worth mentioning the efficiency gains aren’t unlimited. At some point, fewer rigs may start to put real pressure on production figures. But that hasn’t happened yet. The productivity per rig appears high enough for now to offset the fewer drilling operations underway.

That opens up an opportunity to reassess how we interpret headline rig numbers. We shouldn’t consider them a direct guide for short-term output — at least not in isolation. We should watch the actual supply data with equal weight.

From a strategic view, the path forward isn’t about chasing volume signals from rigs alone. Right now, the market is being shaped more by what’s in the pipeline than what’s in the ground. Supply hasn’t faltered much despite the slide in rigs, and that reality could influence how spreads behave.

There’s also the question of whether this growth in output can continue without new investment in fresh wells. If companies begin to delay reinvestment because of price fatigue or tighter capital, we could start to see the lag show up in production curves. But until that happens, we risk overstating immediate supply cuts based on rigs alone.

So while the supply side remains active, if not in headcount then in output, we need to factor that into how we manage our exposure and view short-term positioning. Margins remain under pressure in some calendar spreads, and if hedging activity begins to pick up again — say from producers who want to lock in these levels — it could flatten certain forward structures.

Short-term cues may come less from rig data and more from weekly production reports and build numbers in storage. Those are likely to stir more reaction in prices, especially if alignment between rig declines and actual production softening begins to appear — but that’s not on the tape just yet.

Levels around production efficiency, hedging appetite, and export flows should be watched with care. That’s where the clues for where volatility might reappear tend to hide.

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