Aug 1 (Reuters) - U.S. energy firms this week cut the

number of oil and natural gas rigs operating for a second week

in a row, energy services firm Baker Hughes ( BKR ) said in its

closely followed report on Friday.

The oil and gas rig count, an early indicator of future

output, fell by two to 540 in the week to August 1, the lowest

since October 2021.

Baker Hughes ( BKR ) said this week's decline puts the total rig

count down 46 rigs, or 7.8% below this time last year.

Baker Hughes ( BKR ) said oil rigs fell by five to 410 this week,

their lowest since September 2021, while gas rigs rose by two to

124, their highest 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 boosting shareholder returns and paying down debt rather

than increasing output.

Even though analysts forecast U.S. spot crude prices would

decline for a third year 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 13.4 million bpd in 2025.

On the gas side, the EIA projected a 68% increase in spot

gas prices in 2025 would prompt producers to boost

drilling activity this year after a 14% price drop in 2024

caused several energy firms to cut output for the first time

since the COVID-19 pandemic reduced demand for the fuel in 2020.

The EIA projected gas output would rise to 105.9 billion

cubic feet per day (bcfd) in 2025, up from 103.2 bcfd in 2024

and a record 103.6 bcfd in 2023.