UPDATE 1-Global rig count down 3.5 pct in May - Baker Hughes

June 5 (Reuters) - The number of drilling rigs operating globally fell 3.5 percent in May compared with April, according to closely watched data from Baker Hughes Inc (BHI.N).

The global rig count fell to 1,983 in May, from 2,055 in April as drillers, particularly in United States and Canada, continued to idle rigs in the wake of falling energy demand.

However, the international rig count for May was 993, up 7 from the 986 counted in April. This is the first time the international rig count has been up this year.

U.S. rig count for May was 918, down 77 from April, the lowest decline rate since November last year.

Rig count in the U.S. has been hit particularly hard so far because many wells are drilled with equipment on shorter contracts and by smaller operators that respond more quickly to market signals in order to manage their cash and risk.

But over the last few weeks analyst have been turning bullish on the drillers and oilfield services providers.

Canada rig count for April was down by 2 to 72.

Recently Dahlman Rose upgraded its outlook for the offshore drillers citing its expectation for increased spending by oil and gas exploration and production companies.

Deutsche Bank also upgraded few drillers saying improving oil market conditions and an increase in drilling intensity for oil should boost demand.

Last month, Citigroup and Morgan Stanley raised their price targets on U.S.-based oil services companies, including Halliburton (HAL.N), Schlumberger (SLB.N), and Baker Hughes (BHI.N) citing an anticipated recovery in oilfield fundamentals. (Reporting by Hezron Selvi in Bangalore, Editing by Dinesh Nair)