UPDATE 1-US natgas rig count hits 5-mth high-Baker Hughes
* Gas-drilling rig count hits highest since early March
* Horizontal rigs jump sharply, set new record high. (Adds price reaction, details, background)
NEW YORK, Aug 12 (Reuters) - The number of rigs drilling for natural gas in the United States climbed to its highest in more than five months, rising by 13 this week to 896, data from oil services firm Baker Hughes showed on Friday.
The gas-directed rig count, which has gained in four out of the last five weeks, is at its highest since early March, but the count is down nearly 10 percent from its 2010 peak of 992 last August, its highest since February 2009, when 1,018 rigs were drilling for gas.
Horizontal rigs -- the type most often used to extract oil or gas from shale -- jumped by 24 to a record high 1,123, eclipsing the previous record of 1,102 hit three weeks ago. It was the fourth gain in the horizontal count in the last five weeks.
(Rig graphic: r.reuters.com/dyb62s )
Analysts estimate that 57 percent of horizontal rigs are drilling for natural gas, down about 7 percentage points so far this year, with the rest drilling for oil.
Horizontal gas rigs comprise part of the overall gas rig count.
Front-month U.S. natural gas futures NGc1, which were down 0.6 cent at $4.102 per million British thermal units just before the data was released at 1 p.m. EDT (1700 GMT), slipped nearly 3 cents to $4.075 shortly after the report.
Some firms have shifted spending away from gas to more profitable liquids or oil-related ventures due to relatively low gas prices. The changes have yet to be reflected in industry data, which still show production at record levels.
In its Short-Term Energy Outlook on Tuesday, the Energy Information Administration said it expected marketed natural gas production this year to climb 3.68 bcf per day, or 6 percent, to a record high 65.51 bcf, easily eclipsing the previous high of 62.05 from 1973. [ID:nN1E7780ZD]
Despite plenty of record heat this summer, traders noted that high domestic gas production has easily offset the surge in cooling demand and some storm-related supply cuts.
The gas rig count of 896 remains well above the 800 level some analysts say is needed to cut production significantly and tighten overall supplies.
Most analysts expect no major slowdown in domestic gas output until early next year.
The gas rig count is about 44 percent off its record peak of 1,606 from September 2008, and 96 rigs, or nearly 10 percent, below the same week last year.
Rising output from shale gas has been the primary driver of increased gas production in the last few years, and most traders agree it will be difficult to tighten the loose gas market unless horizontal gas drilling slows sharply.
Without serious production cuts or a stronger economic recovery to boost industrial demand, which accounts for about 30 percent of gas consumption, few traders expect much upside in gas prices near-term. (Reporting by Joe Silha;editing by Sofina Mirza-Reid)
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