It’s a weird time to be watching the oil patch. If you just look at the US oil gas rig count, you’d probably think the industry is in a tailspin. As of mid-January 2026, the numbers are... well, they’re down. Baker Hughes just reported the total count at 544. That’s a drop from the week before and a significant 40-rig slide from this time last year.
But here’s the kicker: we are still pumping massive amounts of oil.
In the old days—like, five years ago—a falling rig count was a clear "check engine" light for the economy. Fewer rigs meant fewer wells, which meant a supply crunch was coming. Now? It’s basically just a Tuesday. The relationship between how many steel towers are poking into the ground and how much crude actually comes out of the pipe has been completely severed.
The Permian is Doing More With Less
Honestly, the Permian Basin is carrying the entire team on its back right now. Even though the rig count in West Texas and New Mexico has softened—dropping by three just last week to around 244—the efficiency is off the charts. We aren't just drilling; we’re precision engineering.
Companies are now drilling "super-laterals." These are horizontal sections of a well that can stretch for three miles or more. Think about that. You drill down a couple of miles, then turn the bit 90 degrees and go another three miles sideways. One rig doing that can replace three rigs from 2019.
The data shows that oil-directed rigs are the ones taking the biggest hit, down about 71 year-over-year to 409. Why? Because the price of West Texas Intermediate (WTI) is hovering in a range that makes "growth at any cost" look like a bad fever dream. The EIA is actually forecasting WTI to average around $51-$52 a barrel for the rest of 2026. At those prices, you don't drill for fun. You drill because you have to maintain your "base decline" or satisfy a contract.
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A Tale of Two Commodities
While oil is feeling the squeeze, natural gas is having a bit of a moment. The US oil gas rig count for gas-only projects actually jumped up by 24 compared to last year, sitting at 124. This isn't because people are suddenly obsessed with heating their stoves.
It’s all about the LNG.
The United States has become the world’s "swing exporter" for Liquified Natural Gas. With new terminals like Plaquemines LNG and Golden Pass ramping up, there is a massive hunger for feed-gas. If you’re a driller in the Haynesville or the Marcellus, you aren't looking at the local weather forecast; you’re looking at demand in Europe and Asia.
Why 2026 is the Year of "Capital Discipline"
You’ll hear the phrase "capital discipline" a lot if you hang out with energy analysts. Basically, it’s a fancy way of saying "the shareholders are tired of us wasting money."
In previous cycles, whenever prices ticked up, CEOs would throw every rig they could find at the dirt. Now, they’re paying out dividends instead. They’d rather have a stable, smaller fleet of 544 rigs that makes money than a fleet of 800 that burns cash.
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- The "Venezuela Factor": Recently, there’s been a lot of chatter about Venezuelan oil hitting the market again. President Trump’s recent executive orders and shifts in sanctions have created a cloud of uncertainty. If more heavy crude from South America starts flowing into US refineries, domestic drillers might feel even less inclined to ramp up their own production.
- The Steel Problem: It’s not just about the oil price. The cost of actually running a rig has gone up. Steel tariffs have pushed the price of casing and pipe through the roof. If it costs 20% more to build the well, the oil price needs to be 20% higher to justify it. It’s simple math, but it’s punishing for the small-to-midsize operators in places like the Bakken or the Eagle Ford.
Regional Winners and Losers
It’s not all bad news. While Louisiana dropped three rigs recently and North Dakota is seeing its lowest activity levels in years, some spots are actually growing.
Utah is the surprise star of early 2026. Their rig count jumped to 17, which is the highest it’s been in over a decade. It’s a small slice of the pie, sure, but it shows that there is still some "wildcatting" spirit left in the Rockies.
Meanwhile, the "fringe" acreage in the Permian—the stuff that isn't the "Tier 1" prime land—is being abandoned. Operators are huddling in the core areas where they know exactly what the rocks will give them.
Breaking Down the 544 Rigs
If we look at the current makeup of the US oil gas rig count, it’s a lopsided affair:
- Oil Rigs: 409
- Gas Rigs: 124
- Miscellaneous: 11
The vast majority are horizontal rigs (475). Vertical drilling is essentially a dead art form at this point, reserved for very specific, shallow plays or utility work. If you aren't going sideways, you aren't making money.
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What This Means for Your Wallet
If you’re a consumer, a lower rig count usually sounds scary. But for 2026, it’s actually the opposite. The reason the rig count is low is that there is too much oil on the global market.
Analysts like Tom Kloza are saying this might be the cheapest year for gas since the pandemic. We’re talking about people potentially seeing $2.30 a gallon at the pump in some parts of the country. The industry is a victim of its own success—they got so good at drilling that they crashed their own market.
Actionable Insights for the Near Future
If you're watching the energy sector, don't get distracted by the headline numbers. Here is what actually matters for the rest of the year:
- Watch the Frac Spread Count, Not Just Rigs: A rig drills the hole, but a frac crew finishes the well. Sometimes companies drill a "DUC" (Drilled Uncompleted well) and just leave it there. Watching how many wells are actually being finished tells you more about immediate supply than the rig count does.
- Focus on LNG Feed-Gas Demand: If you see natural gas prices at Henry Hub start to climb toward $4.00 or $5.00, expect that gas rig count to start climbing, regardless of what's happening with oil.
- Efficiency is King: Look for companies that are bragging about "pumping hours" and "lateral length." In a $50 oil world, the company that can drill a well in 12 days instead of 15 is the only one that survives.
The US oil gas rig count isn't the pulse of the economy anymore; it’s more like a thermometer for industry sentiment. Right now, that sentiment is cautious, disciplined, and hyper-focused on technology. We aren't seeing a "bust"—we’re seeing an evolution.