May 9 (Reuters) - U.S. energy firms this week cut the

number of oil and natural gas rigs operating to their lowest

since January, 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 six to 578 in the week to May 9.

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

rig count down 25, or 4% below this time last year.

Baker Hughes ( BKR ) said oil rigs fell by five to 474 this week,

their lowest since January, while gas rigs were unchanged at

101.

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 oil prices would decline for a

third year in a row in 2025, the U.S. Energy Information

Administration (EIA) this week 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.

That increase in production, however, was lower than the

EIA's outlook in April due to lower oil price forecasts as U.S.

tariffs increase the chances of weaker global economic growth

and oil demand.

On the gas side, the EIA projected an 88% 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 104.9 billion

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

and a record 103.6 bcfd in 2023.

Oil and gas drilling permit applications in Texas, the

top U.S. oil-producing state, hit a

four-year low

in April amid concerns that rising

OPEC+

supplies and a trade war will continue to hit crude prices,

consultancy Enverus said on Thursday.

Operators in Texas submitted 570 new drilling permit

applications in April, down from 795 in March and the lowest

number since February 2021, according to Enverus.

Shale producer

Diamondback

said on Monday it will drop three rigs in the

second quarter, and could reduce activity further if oil prices

fall more. Rival

Coterra Energy ( CTRA )

is reducing its 2025 Permian activity by three

rigs, while producer

Matador Resources ( MTDR )

is dropping one drilling rig by the middle of

2025.