U.S. natgas rig count slips 7 to 665 for 7-year low

NEW YORK, July 17 (Reuters) - The number of rigs drilling for natural gas in the United States fell 7 this week to 665, the lowest level in more than seven years, according to a report on Friday by oil services firm Baker Hughes in Houston.

U.S. natural gas drilling rigs have been in a mostly steady decline since peaking above 1,600 in September, and now stand at 869 rigs, or 57 percent, below the same week last year.

It is the lowest natural gas rig count since May 3, 2002, when there were 640 rigs operating.

Sources noted the gas rig count decline seemed to be slowing since first falling below the 700 mark five weeks ago.

Tighter access to credit and a 70 percent slide in natural gas prices to about $3.50 per mmBtu after peaking above $13 last July have forced many producers to scale back drilling operations.

But with the natural gas drilling rig count now firmly entrenched below 700, and monthly production down four straight months through June, some analysts expect to see the supply-demand balance tighten soon.

Government data last week showed U.S. natural gas production in June had finally dropping below the same year-ago month for the first time this year. (Reporting by Joe Silha, editing by John Picinich)