U.S. energy firms have significantly boosted their oil and natural gas rig count for a fifth consecutive week, reaching the highest level since April 2025, according to Baker Hughes. This sustained increase signals a renewed focus on production growth, with the U.S. Energy Information Administration (EIA) forecasting record crude and natural gas output for 2026.
The consistent rise in drilling activity, particularly in key shale regions like Texas and Oklahoma, underscores a strategic shift by energy companies towards expanding supply. This expansion is driven by anticipated higher WTI crude prices and surging demand for natural gas, including for liquefied natural gas (LNG) exports and power-hungry data centers.
Executive Summary
Baker Hughes reported a total U.S. oil and gas rig count of 588 for the week ending July 17, up seven from the previous week and 8% higher year-over-year. Oil rigs specifically rose by seven to 452, marking their highest level since May 2025, while gas rigs held steady at 126. This uptick follows a period of declining rig counts from 2023 to 2025, during which firms prioritized shareholder returns. The EIA projects U.S. crude output to climb to 13.8 million barrels per day (bpd) in 2026 from 13.6 million bpd in 2025, and natural gas production to jump to 111.3 billion cubic feet per day (bcfd) in 2026 from 107.7 bcfd in 2025.
What Happened
For the week ending July 17, U.S. energy firms added seven oil and gas rigs, marking the fifth consecutive weekly increase. This pushed the total rig count to 588, its highest point since April 2025, with oil rigs specifically reaching their highest since May 2025.
Key Developments
- Rig Count Surge: U.S. oil and gas rig count rose for a fifth straight week to 588, the highest level recorded since April 2025.
- Production Forecasts: The EIA projects U.S. crude output to reach 13.8 million bpd and natural gas to hit 111.3 bcfd in 2026, both record highs.
- Demand Drivers: Increased natural gas demand is primarily fueled by electricity generation for power-hungry data centers and rising liquefied natural gas (LNG) exports.
Regional Context
The Permian Basin and other major producing states like Texas and Oklahoma are central to this production resurgence, solidifying the U.S. role as a dominant global energy supplier amidst evolving international market dynamics and geopolitical considerations, including potential supply disruptions from the Iran war.
Market Impact
The rising rig count and robust production forecasts suggest increased supply, which could moderate crude and natural gas price volatility in the Americas. However, spot U.S. West Texas Intermediate (WTI) crude prices are still expected to rise in 2026 due to ongoing supply disruptions from the Iran war. LNG traders will closely monitor the robust gas production supporting export capacity and Henry Hub dynamics.
Outlook
The trajectory of U.S. energy production will be closely watched, with future output influenced by sustained demand from data centers and LNG markets, alongside the ongoing geopolitical landscape affecting global crude prices.
