The drop in rig activity reflects a broader industry trend: energy firms are prioritizing shareholder returns over aggressive production. Rig counts fell by roughly 5% in 2024 and by a deeper 20% in 2023. Companies reduced capital spending and shifted their focus toward debt reduction and dividend payments.
Despite this pullback, the EIA still anticipates a rise in crude oil production. Output is projected to increase from a record 13.2 million bpd in 2024 to 13.6 million bpd in 2025. However, with fewer rigs in operation, this growth may depend heavily on productivity gains and high-performing wells, which could limit future output expansion.
On the other hand, the natural gas (NG) sector tells a different story. Despite weak prices in 2024, the EIA expects a 58% rise in gas prices in 2025. These expectations will likely encourage increased drilling activity. Gas output is projected to grow to 107.7 bcf/d, up from 103.2 bcf/d in 2024. This signals a more bullish outlook for natural gas than for oil in the coming year.
WTI Crude Oil (CL) Technical Analysis
The oil market shows a strongly negative long-term price structure, as it has broken below a symmetrical triangle pattern. This triangle is similar to the one formed between 2011 and 2014. This breakdown has created sustained bearish pressure on a long-term basis. A decisive break below the $55 region could trigger a sharp decline in oil prices.
