US natgas rig count below 700, first time since '02

NEW YORK, June 12 (Reuters) - The number of rigs drilling for natural gas in the United States fell 15 to 685 this week, the first time below the 700 benchmark since late November 2002, according to a report on Friday by oil services firm Baker Hughes in Houston.

U.S. natural gas drilling rigs have been in a steady decline since peaking above 1,600 in September, and now stand at about 819 rigs, or 54 percent, below the same week last year, the lowest level since late November 2002, when there were 679 gas rigs operating.

Near record-high gas production last year and a deep recession that sharply cut demand led to a severe oversupply that pressured gas prices this spring below the $4 per mmBtu level from their peak above $13 last July.

The 75 percent slide in natural gas prices over the last 11 months and tighter access to credit have forced many producers to scale back drilling operations.

With the natural gas drilling rig count finally below the 700 mark, most analysts expect to see year-on-year output declines soon, probably by early summer, which should help tighten the overall supply-demand balance. (Reporting by Joe Silha; Editing by David Gregorio)