John P. Tretbar
Nymex settlement prices last week ranged from $59 to $61 per
barrel. But light sweet crude ended the week just a dime higher than the week
before, settling Thursday at $61.45 per barrel. In lunchtime trading Monday,
the benchmark contract was down nearly five percent to $58 56 per barrel.
London Brent dropped to $62.15. Some analysts are calling the selloff a delayed
reaction to news last week that OPEC Plus will ease its self-imposed production
cuts.
Kansas Common crude at CHS in McPherson remains unchanged since Thursday due to
the holiday, and starts the week Monday at $51.75 per barrel. The average
price for the month of March was just short of $52.89 a barrel, marking the
best monthly average for Kansas Common in McPherson since April of 2019.
U.S. crude production last year dropped by eight percent from the record high
set the year before. As we've told you, the decrease last year was the largest
annual decline in EIA records. But Kansas output dropped even more, down 17
percent from the previous year. Drilling down into the data offered in a new
report from the Kansas Geological Survey, we find the local totals are also
significantly lower. Barton County output averaged 3,787 barrels per day (bpd)
last year, down from 4,459 bpd the year before. Ellis County pumped 5,990 bpd,
down from 6,925 bpd in 2019. Russell County production dropped from 4,107 bpd
in 2019 to 3,593 bpd last year. Stafford county dipped below one million
barrels total production last year for the first time in decades. Average
output fell to 2,488 bpd, from 2,848 bpd the year before.
State regulators reported a small spike in drilling notices in March. The
Kansas Corporation Commission reported 103 intent-to-drill notices statewide
compared to just 31 the month before. That's 213 intents during the first three
months of the year, compared to 171 during the first quarter of last year. The
KCC notes one new intent in Barton County, three in Russell County and one in
Stafford County.
Overall drilling activity in Kansas through the first three months of the year
is down by about half compared to the first quarter of last year. That's
based on new wells spud in the state. During the first quarter of 2021,
Independent Oil & Gas Service reports 102 wells drilled to total depth.
There are 18 active drilling rigs in Kansas, a 200% increase from a year ago.
There are five active rigs in eastern Kansas, up four from the week before, and
13 west of Wichita, up two. Operators say they will soon spud a new well
in Barton County.
The weekly Rotary Rig Count from Baker Hughes rose to 430 Friday, an increase
of 13 oil rigs. That's the largest jump since January 2020. The count in Texas
was up four, New Mexico was up three, and Utah was up two.
Kansas regulators approved seven new drilling permits last week, three in the
eastern half of the state and four in Western Kansas, for a year-to-date total
of 195 new permits.
Out of 19 newly-completed wells in Kansas last week, Independent Oil & Gas
Service says 14 are in Western Kansas, including one in Barton County, two in
Ellis county and two in Stafford County. Operators have completed 178 wells
across Kansas so far this year.
For the first time in over a month, weekly U.S. oil-by-rail traffic declined
last week. The Association of American Railroads reports 10,694 tanker cars
hauling petroleum during the week ended March 27, down 945 tankers from the
week before, and a 4.8% drop from a year earlier.
The government says U.S. crude-oil inventories decreased by 900-thousand
barrels last week. At nearly 502 million barrels, stockpiles are about six
percent above the five-year seasonal average.
U.S. crude production topped eleven million barrels per day for the first time
since late January. The U.S. Energy Information Administration reports
production of 11.145 million barrels per day for the week ending March 26.
That's up 191-thousand barrels per day from the week before, but down nearly
two million barrels per day from last year at this time.
U.S. crude-oil imports increased by half a million barrels per day last week.
Over the past four weeks, imports were down more than nine percent from the
same four-week period last year.
Gasoline stockpiles were up 1.7 million barrels last week, and are about four
percent below the five-year seasonal average. Triple-A says growing stockpiles
and cheaper crude are putting downward pressure on pump prices, but not enough
to report a steady trend just yet. The national average pump price on Monday
(3/29) was lower than the average a week earlier for the first time since last
November.
Ships resumed transit through the Suez Canal last week, as port authorities
braced for a flood of traffic that was diverted or delayed by that grounded
container vessel. Authorities in the Canal Zone hoped to quickly clear the
traffic jam, including a backlog of more than four hundred ships.
Energy Giant Pioneer Natural Resources, announced another huge takeover deal.
Two deals total $11 BILLION in cash, stock and debt to acquire competitors in
the Permian Basin. Pioneer will buy DoublePoint Energy in a deal valued at $6.4
BILLION. The deal increases Pioneer's position to more than 1 million net
acres, adding what the company called primarily undrilled new land. The
transaction is expected to close in the second quarter. It would be Pioneer’s
second big buy in just over six months, after announcing in October it would
buy Parsley Energy for $4.5 billion.
Tallgrass Pony Express Pipeline announced a binding open season looking for
crude-oil shippers. They're offering volume incentive tariff rates to move
crude some 830 miles from North Dakota, Wyoming and Colorado to Cushing,
Oklahoma. Along the way the pipeline connects to refineries in McPherson and El
Dorado, Kansas as well as Ponca City, Oklahoma. Tallgrass converted a 430-mile
natural gas pipeline, and built another 260 miles of new pipe, to extend Pony
Express through southern Kansas into Oklahoma.