News from the Oil Patch, Jan. 17, 2022
John P. Tretbar
Kansas crude prices are at their highest in more three months. Monday's price for Kansas Common crude at CHS was $74 per barrel, after rising nearly two dollars on Friday. Kansas prices jumped more than $11 so far this year.
US crude futures prices were above $84 in midday trading Monday. The last time light sweet crude in New York rose above $84 was November of 2021, and before that you have to go back to October of 2014 to find better prices. Futures prices rose seven percent last week, posting increases of more than five dollars per barrel. Friday's settlement on the Nymex for the benchmark contract was $83.82 per barrel.
The Rig Count in Kansas is up slightly. There are 18 active rigs in eastern Kansas, up one, and 25 west of Wichita, which is unchanged. Independent Oil & Gas Service reported drilling underway on leases in Ellis and Stafford counties. Operators were drilling on one well and about to spud another in Barton County.
Baker Hughes reports a sizable increase in its weekly Rotary Rig Count, with 601 active rigs nationwide, an increase of 11 oil rigs and two seeking natural gas. The count in Texas is up seven rigs for the week.
Operators in Kansas completed 35 wells last week, nine in eastern Kansas and 26 west of Wichita. Independent Oil & Gas Service reports two new completions in Barton County and one each in Ellis, Russell and Stafford counties. That’s 54 newly-completed wells so far this year across the state.
Kansas regulators gave approved 19 new drilling permits last week, 42 so far this year. There are five new permits on file in eastern Kansas and 14 west of Wichita, including on in Ellis County.
Gasoline prices are slightly higher, with the national average climbing last week to just over $3.30 per gallon, nearly half a cent higher than a week earlier, but three cents lower than a month ago. The average in Kansas rose to $2.97 per gallon. Kansas motorists are paying nearly two cents more than a month ago, and 83 cents more than a year ago, according to the auto club Triple-A.
The government reported a big drop in crude-oil inventories last week. The report from the Energy Information Administration shows US stockpiles dropped 4.6 million barrels from the previous week to 413.3 million barrels. Inventories are about eight percent below the five year average for this time of year. EIA said gasoline stockpiles increased by eight million barrels, but are about three percent below the five-year seasonal average.
EIA reports crude imports were up 185-thousand barrels per day last week, to 6.1 million barrels per day. The four-week average is nearly 11 percent higher than the same four weeks last year. U.S. crude production last week dropped by nearly 100-thousand barrels per day to 11.66 million barrels per day. That’s nearly 600-thousand barrels per day higher than during the same week last year.
Oil-by-rail shipments in the U.S. are down 20% year-over year after dropping 112 carloads last week. The Association of American Railroads reports 8,894 tanker cars hauling petroleum for the week through January 8th. AAR says overall rail traffic is down 16% from a year ago. Rail shipments of Canadian crude are down 25% from a year ago, but increased by nearly 300 carloads last week.
China doubled down on imports of crude oil from Iran and Venezuela last year, as refiners brushed off the risk of penalties under US sanctions to scoop up cheap oil. Bloomberg reports 324 million barrels in Chinese imports from the rogue regimes in 2021, the most in three years.
US liquefied natural gas cargoes are heading to Europe instead of more-traditional winter markets in Asia, with 41 tankers likely heading to Europe compared to 24 on the way to Asia. That's the biggest disparity so far this winter. The bigger draw was brought on by volatile gas prices in Europe, where storage inventories are low and their major supplier, Russia, has not delivered as promised.