NEW YORK, Aug 6 (Reuters) - The number of rigs drilling for natural gas in the United States hit a 17-month high this week, rising by 11 to 983, according to a report Friday by oil services firm Baker Hughes in Houston.
That is the highest since February 2009 when there were 1,018 rigs drilling for gas. Horizontal rigs, the type used to extract gas from shale, rose 25 to a record high 878.
U.S. front-month September natural gas futures on the New York Mercantile Exchange NGU0 slid about 2.5 percent to as low as $4.479 per million British thermal units following the release of the data.
Low gas prices in the first quarter had many expecting gas drilling to finally slow this year, but the rig count is well above the 850 mark which some analysts say is necessary to turn year-on-year output negative.
Rising output from shale gas has been the primary driver of increased gas production in the last few years. Recent EIA estimates put U.S. gas output this year at more than 22 tcf, its highest level since 1973, and most traders agree a strong recovery in industrial demand, which accounts for nearly 30 percent of total gas consumption, may be needed to help balance an oversupplied gas market.
The U.S. natural gas drilling rig count is up 318 since bottoming at 665 on July 17, 2009, its lowest level since May 3, 2002, when there were 640 active gas rigs. The rig count is 302 above the same week last year. (Reporting by Edward McAllister and Eileen Moustakis)