News from the Oil Patch, Sep. 14
By John P. Tretbar
National diesel prices set new record highs every day but one in the last week, reaching $6.23 a gallon on Monday. Diesel averages $5.91 per gallon across Kansas, also an all-time high. Regular gasoline is over $4.31 per gallon across the US. In Kansas, the average price for a gallon of regular is $3.94, up 18 cents from last week, up 23 cents from a month ago, and more than a dollar higher than a year ago.
Near-month NYMEX crude dropped more than two dollars on Friday but remained over $100 a barrel for a second consecutive trading session for the first time since May. Prices rebounded three percent on Monday, with WTI rising toward $103 a barrel. London Brent tops $107 by midday Monday.
The government reports the largest weekly production average ever. At 13,947,000 barrels per day, US output is up 85,000 barrels a day from last week, and is nearly half a million daily barrels higher than a year ago. Cumulative production so far this year is over 13.7 Million barrels per day.
The latest monthly production report showing state by state numbers reflects output over 13.8 Million barrels per day in June. Weekly tallies have held over 13.8 million barrels a day for several weeks and topped 13.9 million this week. So far this year, cumulative US output averages just under 13.7 million.
Texas produces 41 percent of that. The Lone Star State drops a few barrels in June but holds above 5.7 million barrels a day. Output is slightly lower in New Mexico at 2.3 million barrels a day, and slightly higher in North Dakota at just under 1.2 million barrels a day. Colorado drops slightly to 445-thousand barrels per day. Alaska drops a few barrels to 413 thousand barrels a day. June production in Kansas rises to 68-thousand barrels a day, which matches the states output year to date.
So called "crack spreads" enjoyed by US refineries are combining with crude prices to help ramp up fuel prices. The crack spread is the difference between the spot price of crude oil and the wholesale price of refined product. According to the government, US crack spreads for gasoline are about a dollar higher per gallon than a year ago. The margins for diesel and jet fuel are even higher. The Energy Information Administration asserts that margins are elevated primarily because of global disruptions to refining in the Middle East, Russia and China. EIA says that U.S. refiners have shifted product yields to maximize production of diesel and jet fuel because of the higher profit margins.
Commercial crude-oil stockpiles drop by nearly half a million barrels to just over 424 million as of September 4. EIA says that matches the five-year seasonal average. The Strategic Petroleum Reserves drop another 1.2 million barrels to just over 285 million. That's nearly 120 million barrels lower than a year ago.
Crude-oil imports rise slightly to 6.8 million barrels a day. The four-week average is up more than two percent from a year ago. Total imports for the week are up 54-thousand for the week, and up half a million barrels from a year ago.
EIA reports a big drop in crude-oil imports from Venezuela. For the week through September 4, imports from Venezuela dropped by more than 500,000 daily barrels to just 65,00 barrels per day. Imports from Nigeria were up by more than half a million, to just under six million barrels a day. The government reported more moderate spikes in imports from Colombia, Ecuador and Libya.
Stockpiles at Cushing, Oklahoma drop to 21.8 million, nearly two million barrels over the "tank bottom" levels reached several times in July. This week's tally is down 700-thousand barrels from a week ago, down more than two million barrels from a year ago, and nearly three million barrels below the total two years ago.
Operators in Kansas completed 18 wells this week, with 12 in the western half of the state, including two new well-completions in Ellis County. Kansas regulators okayed 123 new drilling locations for a total of 521 new permits this year. That surpasses the tally a year ago by 22 permits. There are four new permits east of Wichita, and eight in Western Kansas.
The Kansas Rig Count from Independent Oil and Gas Service is unchanged for the week, down five percent from a month ago, and 33 percent lower than a year ago. Drilling continued Friday on leases in Ellis, Barton, Stafford, Finney and Gove counties.
The Rotary Rig Count from Baker Hughes is up one oil rig and up two gas rigs for a total of 591 active drilling rigs. That's an increase of 52 rigs from a year ago. North Dakota reports an increase of four rigs while New Mexico is down three. Texas and Louisiana increase by one rig. California is down one.