Kansas Common crude at CHS in McPherson started the week at
$40.50 per barrel after dropping 75 cents on Friday. Kansas crude prices
are down more than nine dollars from a month ago and are nearly three dollars
lower than a year ago at this time.
Crude oil prices posted their biggest January slide since 1991. Analysts
are blaming the global health emergency for a 15% drop in crude prices, the
biggest January drop in nearly 30 years.
Oil prices have dropped more than 20% from a peak in January after the
spreading virus in China choked off demand in the world’s largest oil
importer. That continues to fuel concerns of excess supplies. Chinese oil
demand has dropped by about three million barrels a day, or 20% of total consumption,
according to Bloomberg.
Hedge funds were heavy sellers of petroleum last week for
the third time in four weeks, amid mounting anxiety about the impact of the
outbreak on oil consumption in China. Reuters reports China’s state-owned
refiners have signalled production cuts totaling more than 900,000 barrels per
day this month. Much deeper cuts are expected next month.
The Houston Chronicle reports three of the
world’s largest oil traders are seeking to store crude on tankers at sea as the
industry tries to deal with the expected glut.
The government's latest reports show the Sunflower State pumped just over 2.61
million barrels of crude oil, or about 87,000 barrels per day in November.
That's down 109,000 barrels from the month before and down 157,000 barrels from
November of 2018.
Independent Oil & Gas Service reported six active drilling rigs in eastern
Kansas, which is unchanged from last week, and 15 west of Wichita, which is
down two. There are 37 rigs listed as pending their next location assignment.
Total inactive rigs are up eleven from last week. Drilling is underway at one
lease in Barton County, and operators are about to spud one well in Ellis
County and one in Stafford County.
Baker Hughes reported 790 active drilling rigs across the country, an increase
of one oil rig and a decrease of one natural-gas rig. The count in New
Mexico was up three rigs, while Oklahoma was down three.
Kansas operators completed 48 wells last week, 14 east of Wichita and 34 in
Western Kansas, including one in Barton County and four in Ellis county.
Independent Oil & Gas Service says that brings the year-to-date total to
146 new well completions. Regulators approved nine new drilling permits across
Kansas last week, 77 so far this year, including two in eastern Kansas and
seven in the western half of the state.
High gasoline stockpiles, coupled with low winter demand, continue to put
downward pressure on pump prices across the country. Triple-A says the national
average is just over two forty-five a gallon. The average across Kansas
is $2.184 [["two eighteen, four"]], down more than four cents on the
week, and more than nine cents cheaper than a month ago. We saw one
station below two dollars a gallon in Hays. The best price we found in Great
Bend was $2.14. You'll save more than a dollar on the average fill-up
compared to last month, and about three dollars compared to six months ago.
Monthly numbers from the Association of American Railroads show a six percent
drop in total freight car-loads originated in January, although oil-by-rail
managed a slight increase compared to a year earlier. For the week ending
February 1, petroleum shipments increased two percent. The cumulative total so
far this year is up just over one percent compared to the same period in 2019.
Canada managed a whopping 51% increase for the week and a year-to-date increase
The U.S. Energy Information Administration reported a slight drop in domestic
crude-oil production, but it's still the third-highest weekly total ever.
For the week ending January 31, EIA says U.S. operators pumped an average of
12.885 million [["twelve point eight eight five million"]] barrels
per day. The government reported an increase in U.S. crude stockpiles of
nearly three and a half million barrels. U.S. crude oil imports continue to
decline, dropping 46,000 barrels per day last week to 6.6 million [["six
point six million"]] barrels per day.
An oil-patch trade group in Texas reports some contrary annual statistics for
the energy sector in the Lone Star State last year. The Texas Alliance of
Energy Producers says the industry contracted for the last ten months of the
year despite steadily rising oil and gas production throughout the year.