The number of energy rigs in the U.S. declined this week to the lowest level in almost two years, according to Baker Hughes Inc. (BHI:US)
The total rig count fell by 30 to 1,746, the Houston-based field-services company said on its website. The count was the lowest since March 25, 2011. Oil rigs dropped by 17 to 1,324. Natural gas rigs declined by 13 to 418.
U.S. gas rigs have dropped five straight quarters as declining demand for the heating fuel and a glut of domestic supplies drove down prices, prompting energy producers to focus on more lucrative oil and liquids-rich plays.
The gas rig count has ranged from 407 to 439 this quarter as natural gas prices have surged 18 percent, reaching $3.96 per million British thermal units at 12:27 p.m. on the New York Mercantile Exchange. Last year, natural gas prices averaged $2.827. The average for the five years ended 2012 was $4.862.
Power producers have reacted to the low price of natural gas by switching their fuel use to gas from coal. Utilities increased power generation from natural gas by 21 percent to 1.2 billion megawatts last year and decreased coal-fired generation by 12 percent to 1.5 billion, the U.S. Energy Information Agency said in a report released yesterday.
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