US natural gas rig count slide slows, down 2 for wk

Fri Apr 3, 2009 3:44pm EDT

Market News

Wall St Week Ahead: Optimism may extend rally in short week

Oil settles slightly lower, job report weighs | Video

Dow ends above 8,000 in best 4-week run since 1933 | Video

More Business & Investing News...

NEW YORK, April 3 (Reuters) - The steep slide in the number of rigs drilling for natural gas in the United States slowed last week, with the total dropping just two to 808, according to a report issued on Friday by oil services firm Baker Hughes Inc in Houston.

The current gas rig count stands about 650 below the same week last year and is still near a six-year low, or the lowest level since April 25, 2003, when there were 804 gas rigs operating.

Traders and analysts have said tight credit and a 70 percent slide in gas prices over the last nine 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 from a peak above $13 in July to below the $4 per mmBtu level currently.

Gas rigs are expected to decline another 10 to 15 percent this year before bottoming in the low 700s, a level that should turn output negative and help tighten the overall supply-demand balance. (Reporting by Joe Silha; Editing by Christian Wiessner)

© Thomson Reuters 2009 All rights reserved

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.