The number of oil and gas rigs fell to 916, down 12 from the previous week, according to rig data from oil-field services company Baker Hughes Inc (BHI). The number of gas rigs was 672, a drop of 16 rigs from last week, while the oil rig count rose to 234, an increase of five rigs. The number of miscellaneous rigs fell by one, to 10 rigs.
The number of gas rigs in use peaked at 1,606 in September.
Natural gas prices have plunged about 75% from summer highs amid robust production from U.S. onshore natural gas fields and slumping demand. Large industrial consumers have scaled back gas use to cut costs during the recession. In response to falling gas prices, producers such as Chesapeake Energy Corp. (CHK) and Devon Energy Corp. (DVN) have slashed their spending plans and rig counts to curb the flow of new gas supplies into the market.
Analysts anticipate that the sharp decline in natural gas drilling activity will eventually bring supply back in line with demand and help bolster gas prices.
Gas for August delivery on the New York Mercantile Exchange was recently down 3.3 cents, or 0.97%, at $3.375 a million British thermal units.
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