U.S. natural gas rig count climbs 6 to 734 for week

NEW YORK, Nov 6 (Reuters) - The number of rigs drilling for natural gas in the United States climbed by six this week to 734, according to a report on Friday by oil services firm Baker Hughes in Houston.

The U.S. natural gas drilling rig count has gained in 14 of the last 16 weeks after bottoming at 665 on July 17, its lowest level since May 3, 2002, when there were 640 gas rigs operating.

But the rig count is still down sharply since peaking above 1,600 in September of last year, standing at 805 rigs, or 52 percent, below the same week in 2008.

Many gas producers have scaled back drilling operations with credit still tight and natural gas prices around $4 per million British thermal units (mmBtu), off about 70 percent from July 2008 highs above $13.

But while drilling has dropped sharply over the past year, traders noted production has not slowed much, with government data last week showing gross August gas output in the lower 48 states climbed 0.8 percent from July and stood at about 0.4 percent above year-earlier levels.

Most traders agreed more rig cuts may be necessary to offset record high inventories and steep recession-related cuts in demand, particularly in the industrial sector. (Reporting by Joe Silha; Editing by Marguerita Choy)