Saturday, June 20, 2009

Natural Gas Rig Count Up June 19, 2009

NEW YORK, June 19 (Reuters) - The number of rigs drilling for natural gas in the United States unexpectedly rose by seven to 692 this week, the first gain in the rig count in seven months, according to a report on Friday by oil services firm Baker Hughes in Houston.

U.S. natural gas drilling rigs have been in a mostly steady decline since peaking above 1,600 in September.

Despite the modest gain, the total still stands at about 822 rigs, or 54 percent below the same week last year.

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

The 75 percent slide in natural gas prices during the last 11 months and tighter access to credit have forced many producers to scale back drilling operations.

But sources said new rigs in some prolific shale plays such as Haynesville in Louisiana or Marcellus in Appalachia may have been the reason for the unexpected gain.

The last time the gas drilling rig count rose was on Nov. 21, when the number climbed by 13 to 1,511.

With the natural gas drilling rig count still below the 700 mark, most analysts expect to see year-on-year output declines soon, probably by early summer, which should help tighten the overall supply-demand balance. (Reporting by Joe Silha

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