Monday, August 31, 2009

Natural Gas Rig Count Up This Week

NEW YORK, Aug 28 (Reuters) - The number of rigs drilling for natural gas in the United Stases rose four this week to 699, the sixth straight weekly gain after sinking in mid-July to the lowest level in more than seven years, according to a report on Friday by Baker Hughes in Houston.

U.S. natural gas drilling rigs are still down sharply since peaking above 1,600 in September, and now stand at 907 rigs, or 56 percent, below the same week last year.

During the week ended July 17, the natural gas rig count dipped to 665, its lowest level since May 3, 2002, when there were 640 gas rigs operating.

Tighter access to credit and a 75 percent slide in natural gas prices to below $3 per mmBtu over the last year or so have forced many producers to scale back gas drilling operations.

But while the steep decline in drilling this year has started to slow production and tighten supplies, most traders agreed it has not been enough yet to offset recession-related cuts in industrial demand and slight gains in imports of LNG.

The U.S. Energy Information Administration estimates that domestic gas production fell for a fifth straight month in July, with output in June dropping below the same year-ago month for the first time this year. (Reporting by Joe Silha; Editing by Marguerita Choy)