May 22, 2009 / 6:02 PM / 9 years ago

US natural gas rig count down to near 6-1/2 yr low

NEW YORK, May 22 (Reuters) - The number of rigs drilling for natural gas in the United States fell by 17 to 711 this week, the lowest level in nearly 6-1/2 years, according to a report issued Friday by oil services firm Baker Hughes in Houston.

U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September, and now stand at about 782 below the same week last year, the lowest level since Jan. 3, 2003, when there were 706 gas rigs operating.

Traders and analysts have said tight credit and a 75 percent slide in gas prices over the last 11 months forced many producers to scale back drilling operations.

Near record-high gas production last year and a deepening recession that sharply cut demand led to a severe oversupply that collapsed gas prices to about the $3.25 per mmBtu level in late April from their peak above $13 last July.

With the natural gas drilling rig count falling at a record pace this year, most analysts expect year-on-year output declines soon, probably by early summer, as gas rigs drop below 700 before bottoming, a level that should tighten the overall supply-demand balance. (Reporting by Joe Silha)

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