By John P. Tretbar
"OPEC+ to Increase Output"
OPEC and its allies have confirmed plans to return more than two million barrels of crude oil per day to the international marketplace. Energy ministers on Tuesday said they plan to add back 350,000 barrels per day in June and 440,000 barrels per day in July, while Saudi Arabia adds back its one million barrels in additional, voluntary cuts. A technical report from the cartel Monday suggested world oil demand is set for a big rebound. Crude futures prices gained nearly four percent in morning trading Tuesday, ahead of the announcement of increased output.
Kansas Common crude at CHS in McPherson starts the week and the month of June at $56.50 per barrel. That's up a quarter from the week before, but nearly three dollars higher than a month earlier. The average price for the month of May was $55.28 per barrel.
Independent Oil & Gas reports four active rigs in eastern Kansas, down two for the week, and 18 west of Wichita, down one. Operators are about to spud three new wells in Ellis County, and reached total depth on two more. Drilling was underway on one lease in Stafford County.
Baker Hughes reported 457 active drilling rigs across the U.S. on Friday, an increase of three oil rigs. The count in Texas was up four rigs, while New Mexico was down one. The national count is down 4% in the last month, but up 63% year-over-year, according to Enverus Rig Analytics.
Out of 27 new drilling permits approved across Kansas last week, just three were west of Wichita. That's 351 new drilling permits so far this year, compared to 187 by the end of May last year amid the pandemic slowdown. It's seven permits short of the total through May of 2019. Independent Oil & Gas Service reported 23 new well-completions for the week, nine in eastern Kansas and 14 west of Wichita. That's 300 completed wells so far this year across the state.
Weekly U.S. crude-oil production topped eleven million barrels per day for the first time in five weeks, increasing 92-thousand barrels per day from the week before. The government reported a slight drop in imports and inventories. For the week ending May 21, domestic stockpiles dropped 1.7 million barrels to just over 484 million. That's about two percent below the five-year seasonal average. Domestic gasoline stockpiles dropped by 1.7 million barrels last week, and are now about three percent below the five-year average. Crude imports were down 138-thousand barrels to 6.3 million barrels per day. The four-week average for U.S. imports is down slightly from a year ago.
Memorial Day weekend gasoline prices were the highest in seven years. The auto club AAA says the national average Thursday was just over $3.04 per gallon, more than a dollar higher than last year. The average across Kansas was $2.82 per gallon. Prices held steady locally, with most stations in Hays and Great Bend posting $2.74 per gallon. Your 15-gallon fill-up cost nearly $17 more than it did last Memorial Day.
Oil-by-rail traffic was down last week but remains nearly ten percent above the totals from a year ago. The Association of American Railroads reported 10,800 tanker cars moving petroleum or petroleum products for the week ending May 22. That's down 430 cars from the week before but it marks a 9.8 percent increase over the same week last year.
An oil-drillers group in Canada is raising its drilling forecast for the year. The Petroleum Services Association of Canada, raised it's annual forecast to 3,600 new wells this year, up 7.5 percent from their prediction at the start of the year. A report in the Financial Post credits higher oil demand, support for higher prices, and a big government fund to keep service workers busy decommissioning wells. Drilling in Canada was down 30% in the first quarter of 2021, compared to a year earlier. But the group expects drilling from April to December to double that for the same 9-month period in 2020.
The world's largest energy companies are increasingly being forced to rethink their positions on climate change, after historic defeats in the boardroom and in the courtroom. Exxon Mobil lost at least two board seats to a small activist hedge fund making green demands in what was the most expensive proxy fight in history. Vote tallies for five more seats on the Exxon board were too close to call. Shareholders at Chevron backed a call for that company to cut emissions from the end-use of its products. 61 percent of voting stockholders supported the petition. And, a judge has ordered Royal Dutch Shell to slash emissions from the end use of its products by 45% in less than ten years. Shell said it would appeal, and analysts said the decision is not the final word in the case.
A new government report suggests a huge drop in US electricity consumption last summer, except at home, where usage spiked. Total usage was the lowest in five years. Commercial and Industrial consumption dropped to the lowest level since 2004. But residential consumption was through the roof. The Energy Information Administration says near-record high temperatures, along with more people spending more time at home, prompted all-time record high consumption among residential users. This year, EIA predicts growth in consumption among commercial and industrial customers, and a decline in residential use.
The state-run oil company of Mexico is buying the remaining interest in a refinery complex it operates in Houston. For nearly thirty years, PEMEX and Shell have jointly operated the Deer Park facility in a fifty-fifty partnership. Now Pemex is buying out its partner for $596 million in cash, debt, and inventory. Shell officials said they had not planned on marketing their half of the refinery, but reached the agreement following an unsolicited offer.