News from the Oil Patch, Dec. 9
John P. Tretbar
Crude prices resume their wobbly ways, down two percent Friday, and up two percent on Monday. NYMEX crude dropped a dollar and a dime Friday to settle at $67.20 per barrel, an 80-cent weekly loss. That marks the first time since mid-November, and only the eighth time this year, that the closely-watched futures contract has settled below $68. Prices were two percent higher by lunchtime Monday, with New York crude over $68 and London Brent trading over $72 a barrel.
The weekly Rig Count from Baker Hughes is 589 active drilling rigs, up five oil rigs and two gas rigs. The Texas tally is up five rigs. The breakouts for directional and horizontal wells were up nine rigs between them, with vertical wells dropping by two.
The Kansas Rig Count from Independent Oil and Gas Service is down one rig in eastern Kansas at ten, and up two rigs west of Wichita at 21. The statewide total of 31 is up three percent from a week ago, but down nearly nine percent from a month ago, and down more than 16 percent from last year. Drilling continued Monday on leases in Stafford and Ellis counties.
Kansas regulators okayed 14 new drilling permits last week, with three in Western Kansas including two in Ellis County. That's 1,085 new drilling locations in Kansas so far this year, down 130 from a year ago at this time.
Independent Oil and Gas Service reports operators completed 32 new wells statewide, with 12 in Western Kansas, including one in Barton County. Completions are down 347 wells from a year ago at this time.
Weekly crude production topped 13.5 million barrels a day for only the fifth time. The Energy Information Administration says domestic crude production for the week ending November 29th averaged 13,513,000 barrels per day. Output is just 22,000 barrels a day shy of the record, set in October. Cumulative production this year beats last year by more than five percent, at well over 13.2 million barrels a day.
The dip stick at the Strategic Petroleum Reserve on November 29 showed 391.8 million barrels of crude, up 1.4 million barrels from a week earlier. The reserve is down from about 630 million barrels when President Biden took office. The administration sold millions of barrels of SPR crude at around $95 a barrel two years ago to slow the rise in prices. In the last year, they've bought nearly 40 million barrels at roughly $70 a barrel.
EIA said commercial crude inventories dropped by more than five million barrels to just over 423 million. Stockpiles are about five percent below the five-year average for this time of year.US crude-oil production retreats from a monthly record set in August, but the annual average is on track for another record. The latest numbers from the Energy Information Administration show September output increased in most of the top-producing states, but a 12% drop in the Gulf of Mexico cut the national average by 157-thousand barrels per day, or 1.2%, down to 13.2 million barrels per day.
EIA says cumulative production through September averaged 13.1 million barrels a day. Weekly tallies from the EIA have been over 13.3 million ever since, and the government forecasts record annual production over 13.2 million barrels per day at the end of the year. The average in Kansas was 76,000 barrels a day in September, but EIA says the average through September is down to 74,000.The US imports more crude oil than we export, by more than three million barrels a day. Refined product exports top imports by about six million daily barrels.
The Energy Information Administration reports crude imports of 7.3 million barrels a day last week. That's up more than 1.2 million barrels a day from a week earlier and about a quarter million daily barrels short of last year at this time. The four-week average is up five percent over a year ago. US crude exports dropped by about ten percent to 4.2 million barrels a day. That's down more than 400,000 barrels from last week and 100,000 barrels less than a year ago. Four week average crude exports are down about 11 percent compared to a year ago.
The U.S. is ramping up sanctions on the "shadow fleet." The Treasury Department is targeting 35 entities and vessels it said carried illicit petroleum from Iran to foreign markets. The sanctions build on those imposed last month and come in response to Iran's attacks on Israel and its announced nuclear escalations. These sanctions target key sectors of Iran's economy with the aim of denying the government funds for its nuclear and missile programs. The move generally prohibits any U.S. individuals or entities from doing any business with the targets, and freezes any assets being held by the U.S. The government cites shipping reports noting eight of the 21 sanctioned ships are loaded with oil, while another was on its way to a Russian port to lift a cargo.
The winter heating season is underway and United States is well stocked with propane, thanks to a pair of mild winters. EIA says U.S. propane inventories totaled 103 million barrels at the end of the week of October 11, the most since government reporting started in 2015. In the week ending November 1, inventories decreased to slightly more than 100 million barrels, about 11 percent more than the five-year average.
The government says global natural gas markets are well supplied, with prices only slightly higher than last year going into the winter heating season. If weather remains mild this winter as in the past two winters, EIA forecasts similar prices.