Saturday, April 18, 2009

Natural Gas Rig Count at 760 Today

NEW YORK, April 17 (Reuters) - The number of rigs drilling for natural gas in the United States fell 30 to 760 last week, the lowest level in more than six years, according to a report issued on Friday by oil services firm Baker Hughes Inc in Houston.

U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September and now stand about 701 below the same week last year, the lowest level since March 14, 2003, when there were 754 gas rigs operating.

Traders and analysts have said tight credit and a 70 percent slide in gas prices over the last nine months forced many producers to scale back drilling operations.

Near record-high gas production last year and a deepening recession that sharply cut demand led to a severe oversupply that collapsed gas prices to below the $4 per mmBtu level from their peak above $13 in July.

With the natural gas drilling rig count falling at a record pace this year, most analysts expect year-on-year output declines soon, probably by summer.

Gas rigs are expected to decline another 10 percent or so this year before bottoming at about 700, a level that should turn output negative and help tighten the overall supply-demand balance. (Reporting by Joe Silha, editing by John Picinich)

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