HOUSTON (Dow Jones)--The number of rigs drilling for natural gas climbed this week as producers boosted activity in response to higher commodity prices.
The number of oil and gas rigs climbed to 1,396, up 23 from the previous week, according to data from oil field services company Baker Hughes Inc. (BHI). The number of gas rigs was 926, an increase of 21 rigs from last week, while the oil rig count was unchanged at 456. The number of miscellaneous rigs was 14, an increase of two rigs.
The number of gas rigs in use peaked at 1,606 in September 2008. Producers scaled back natural gas drilling sharply last year in response to low prices amid a flood of supply from shale-rock formations. But the rig count has steadily climbed over the last several weeks, as producers locked in prices on future output and frigid winter weather boosted gas demand.
However, some traders and analysts see the rising rig count as a sign that supply will outstrip demand as winter heating use subsides and more gas is injected into underground storage.
In September, natural gas prices reached their lowest level in more than seven years, but prices recently have bounced back somewhat from that low. Winter weather has spurred significant demand for gas heating, putting a dent in inventories and paring them back to near-average levels.
Total gas in U.S. storage for the week ended Feb. 26 was 1.737 trillion cubic feet--about 4% below last year's level and 1.2% above the five-year average.
Natural gas for April delivery on the New York Mercantile Exchange recently traded less than a penny lower at $4.567 a million British thermal units.
-By Jason Womack, Dow Jones Newswires; 713-547-9201; jason.womack@dowjones.com
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