UPDATE 1-US natgas rig count drops for 8th week, hits 23-month low30 minutes ago by Thomson Reuters * US natgas rigs fall for 8th week, hit 23-mth low
* Horizontal rigs fall from record high (Adds price reaction, background)
NEW YORK, Dec 22 (Reuters) - The number of rigs drilling for natural gas in the United States slid by 16 this week to a 23-month low of 802, the 8th straight weekly decline, data from oil services firm Baker Hughes showed on Friday.
Baker Hughes released the data a day early this week due to the upcoming Christmas holiday, and will do the same next week ahead of New Year's.
The gas-directed rig count has dropped some 132 rigs, or 14.1 percent, in the last eight weeks, and is hovering just above 800, a level some analysts say is needed to cut output and tighten supplies.
The count is down 19.2 percent from its 2010 peak of 992. That, in turn, was its highest since February 2009, when 1,018 rigs were drilling for gas.
Horizontal rigs, the type most often used to extract oil or gas from shale, fell 12 to 1,172 after hitting a record high the previous week.
Front-month U.S. natural gas futures, which were trading down slightly at about $3.152 per million British thermal units area just before release of the data at 2 p.m. EST (1900 GMT), eased slightly to the $3.12 area shortly after the report.
Rising output from shale gas has been the primary driver of increased gas production in the last few years, and most traders agree it will be difficult to tighten the loose gas market unless horizontal gas drilling slows sharply.
But while the share of horizontals drilling for dry gas has fallen to about 50 percent from 80 percent just two years ago, traders said a slowdown in production could take a lot more time, noting liquids-rich and oil-related wells still produce plenty of gas which ends up in the market after processing.
Most analysts expect no major slowdown in domestic gas output until the second half of next year. (Reporting by Joe Silha)