Natural gas rises in NY

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NEW YORK, May 16 (Bloomberg): Natural gas futures rose in New York as data showed the number of gas drilling rigs fell to the lowest level in 15 months. Prices erased earlier declines after Houston-based Baker Hughes Inc. said the count declined 16 to 874 this week, the lowest level since January 29, 2010. Gas also rose as prices reached a support level of $4.20, said Carl Neill, an energy consultant at Risk Management Inc in Atlanta. "That's a big drop for the rig count and it's going to support the market," said Neill. "You are having summer heat coming in a few weeks and the market isn't ready to move lower." Natural gas for June delivery gained 5.2 cents, or 1.2 per cent, to settle at $4.246 per million British thermal units on the New York Mercantile Exchange. The futures rose 0.3 per cent this week, the fourth increase in five weeks. The gas rig count has declined 4.9 per cent this year, the Baker Hughes data showed. Falling rigs reduce future gas production. The Energy Department lowered on May 10 its forecast for gas output in 2011 and raised its outlook for prices. Gas production will average 63.23 billion cubic feet a day in 2011, down from 63.32 billion estimated in April, the department said in its monthly Short-Term Energy Outlook. Gas prices at the benchmark Henry Hub in Erath, Louisiana, will average $4.37 per thousand cubic feet, or $4.24 per million British thermal units, up from the previous estimate of $4.10 per million Btu, according to the department.