NEW YORK, Nov 27 (Reuters) - The number of rigs drilling for natural gas in the United States rose by 22 to 748 this week, according to a report on Wednesday by oil services firm Baker Hughes in Houston.

The U.S. natural gas drilling rig count has gained in 15 of the last 19 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 695 rigs below the same week in 2008.

Many gas producers have scaled back drilling operations with credit still tight and natural gas cash prices hovering near $3 per million British thermal units (mmBtu), off more than 75 percent from July 2008 highs above $13.

While drilling has dropped sharply over the past year, traders noted production has not slowed much, with recent government data showing gross August gas output in the lower 48 states up 0.8 percent from July and 0.4 percent above year-earlier levels.

Many traders agreed more rig cuts may be necessary to balance an oversupplied market, with gas inventories at record highs and demand, particularly from the industrial sector, still down sharply due to the recession. (Reporting by Edward McAllister; Editing by Marguerita Choy) ((Edward.mcallister@thomsonreuters.com; +1 646 223 6221; Reuters Messaging:edward.mcallister.reuters.com@reuters.net))