Fri Apr 23, 2010 10:54pm IST
NEW YORK, April 23 (Reuters) - The number of rigs drilling for natural gas in the United States fell 17 this week to 956, according to a report on Friday by oil services firm Baker Hughes in Houston.
It was the first time in 17 weeks the rig count declined.
Last week's total count of 973 was the highest level of gas drilling since Feb. 20, when there were 1,018 gas rigs operating.
U.S. natural gas futures prices NGc1 on the New York Mercantile Exchange, which were trading up about 7 cents in the $4.20 per million British thermal units area before the report, moved up another 4 cents to an intraday high of $4.242 after the data was released.
The U.S. natural gas drilling rig count is still up by 291 rigs, or 44 percent, since bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 active gas rigs.
While the rig count is well off its peak above 1,600 in September 2008, it still stands at 214 rigs, or 29 percent, above the same week last year.
Many gas producers scaled back drilling early last year with credit tight and natural gas cash prices sinking late last summer to about $2 per million British thermal units, a 7-1/2 year low and down 85 percent from July 2008 highs above $13.
With current gas prices of about $4, down more than 30 percent since early January highs above $6, some analysts expect to see a slowdown in drilling, noting current prices were no longer a strong incentive to start new wells.
The break-even point for some key shale basins like Haynesville in Louisiana and Marcellus in Appalachia ranges between $3.50 and $4, according to some analysts.
A number of producers have said they will reduce spending for gas drilling this year and focus instead on more profitable oil prospects.
But traders noted production has not slowed much, if at all, this year, with recent government data showing January gross natural gas output rose 0.9 percent from December and was still pegged at about 0.6 percent above January 2009 levels.
But the U.S. Energy Information Administration said last week it will revise the way it calculates gross domestic gas output starting with its February report due out on April 29, adding production in key states like Louisiana and Texas may be overstated and could see significant revisions.
Some traders said rig cuts eventually may be necessary to balance the market unless demand, particularly from the industrial sector, shows stronger signs of recovery with the economy. (Reporting by Joe Silha; Editing by Marguerita Choy)
Source: http://in.reuters.com/article/oilRpt/idINN2323630920100423?sp=true
NEW YORK, April 23 (Reuters) - The number of rigs drilling for natural gas in the United States fell 17 this week to 956, according to a report on Friday by oil services firm Baker Hughes in Houston.
It was the first time in 17 weeks the rig count declined.
Last week's total count of 973 was the highest level of gas drilling since Feb. 20, when there were 1,018 gas rigs operating.
U.S. natural gas futures prices NGc1 on the New York Mercantile Exchange, which were trading up about 7 cents in the $4.20 per million British thermal units area before the report, moved up another 4 cents to an intraday high of $4.242 after the data was released.
The U.S. natural gas drilling rig count is still up by 291 rigs, or 44 percent, since bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 active gas rigs.
While the rig count is well off its peak above 1,600 in September 2008, it still stands at 214 rigs, or 29 percent, above the same week last year.
Many gas producers scaled back drilling early last year with credit tight and natural gas cash prices sinking late last summer to about $2 per million British thermal units, a 7-1/2 year low and down 85 percent from July 2008 highs above $13.
With current gas prices of about $4, down more than 30 percent since early January highs above $6, some analysts expect to see a slowdown in drilling, noting current prices were no longer a strong incentive to start new wells.
The break-even point for some key shale basins like Haynesville in Louisiana and Marcellus in Appalachia ranges between $3.50 and $4, according to some analysts.
A number of producers have said they will reduce spending for gas drilling this year and focus instead on more profitable oil prospects.
But traders noted production has not slowed much, if at all, this year, with recent government data showing January gross natural gas output rose 0.9 percent from December and was still pegged at about 0.6 percent above January 2009 levels.
But the U.S. Energy Information Administration said last week it will revise the way it calculates gross domestic gas output starting with its February report due out on April 29, adding production in key states like Louisiana and Texas may be overstated and could see significant revisions.
Some traders said rig cuts eventually may be necessary to balance the market unless demand, particularly from the industrial sector, shows stronger signs of recovery with the economy. (Reporting by Joe Silha; Editing by Marguerita Choy)
Source: http://in.reuters.com/article/oilRpt/idINN2323630920100423?sp=true
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