U.S. Rig Count Up 19 by Baker Hughes

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.

(Graphic: link.reuters.com/sup34k)

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)