Baker Hughes (NYSE:BHI) put out its rig count again last week, and I'm just updating with the data. The natural gas count slipped to 7-year lows, as producers continue to shut off supply (data via 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.
- 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.
The bulls on natural gas have said eventually all this shutting off of supply will balance out with demand, and push gas prices higher. Prices have bounced slightly off their lows of the previous week or two, but still remain depressed.
Disclosure: Long UNG.