USD weakens as oil rigs drop, gas rigs rise in mixed energy outlook

The US dollar faced mild selling pressure following the latest Baker Hughes rig count data, which showed oil rigs declining by 2 to 422 while gas rigs surged by 9 to 117, bringing total rigs up by 7 to 544. This mixed energy sector signal creates uncertainty for USD strength, as lower oil rig counts suggest potential supply constraints that could boost oil prices and inflation expectations. However, the significant increase in gas rigs indicates expanding natural gas production capacity, which may help moderate energy costs. The divergent trends in oil versus gas drilling activity reflect the complex energy landscape affecting the dollar. Currency pairs with commodity-linked currencies like CAD and NOK could see increased volatility as markets digest these conflicting signals. Traders should monitor how energy prices react to these rig count changes, as sustained moves in oil and gas could influence Federal Reserve policy considerations and broader USD momentum in the coming sessions.