News from the Oil Patch, Apr. 27
By John P. Tretbar
Kansas crude prices are about ten dollars higher than last week, but five dollars lower than last month. Kansas Common crude at CHS in McPherson starts this week at $84.50 per barrel after dropping a $1.50 on Friday. The average price in McPherson so far this month is over $87, which would be the highest monthly average since July 2022.
Near-month NYMEX crude settled more than a dollar lower Friday (4/24) at $94.40 per barrel. Dated Brent closed over $118 a barrel for April, and over $105 for May delivery. By Monday afternoon the futures markets were up two percent or more, with the benchmarks rising over $96 in New York and over $108 in London.
Traders placed a series of bets on a drop in crude prices worth $430 million just 15 minutes before U.S. President Donald Trump said he would extend a ceasefire with Iran. Reuters reports the third such spike in well-timed, directional bets on the price of oil in the moments before announcements on the Iran War. One combined wager in March was worth $500 million, while April’s bets together top $2.1 BILLION.
The President doubles down on his National Energy Emergency by invoking a cold-war era law called the Defense Production Act to spur energy projects. Five orders issued by the President will target domestic coal power, liquefied natural gas, domestic energy and power infrastructure, which the administration described as industrial resources that are essential to the national defense.
Operators are dusting off old drilling rigs currently in storage in Venezuela, a sign the country's legal reforms are taking hold and service companies are regaining confidence. Reuters reports foreign and local producers have been submitting the required documentation for new government reviews of oil and gas contracts. The reviews have already generated new business, and thus new demand for drilling rigs. Reuters reports at least nine rigs have been taken out of storage in Venezuela in recent weeks to prepare for onshore deployment, while another five are being assessed before moving.
Crude-oil exports are down slightly, but exports of refined products, and total petroleum exports set new records this week Total weekly petroleum exports top 12-million barrels a day for a second week in a row and now exceed 12.8 million, the highest weekly average ever. Product exports top 8-Million barrels a day for the first time, vaulting half a million daily barrels from last week, and 1.5 million from a year ago.
The Rotary Rig Count from Baker Hughes rose by four gas rigs, but the oil tally was down three, for a total of 544 active rigs. That's up one from last week, but down 43 rigs from a year ago. The State Variances show New Mexico down by two rigs which Texas is up two. The count in Oklahoma is up one rig.
The Kansas Rig Count from Independent Oil and Gas Service is unchanged from a week ago, with eleven active rigs east of Wichita and eight in Western Kansas. Drilling was reported Friday on leases in Ellis and Russell counties, and was about to get underway on a lease in Rooks County.
Kansas drillers complete six new wells this week, with one in Finney County out of three in Western Kansas. Independent Oil and Gas Service reports 216 new well-completions this year, down from 412 a year ago. Operators have drilled 191 wells from spud to completion in Kansas this year, down 35 percent from a year ago. Total footage drilled is down by more than half.Kansas regulators okay 24 new drilling locations, with new permits in Ellis and Finney counties, and two new permits in Graham County. That's 205 new drilling permits this year, compared to 230 at this point last year.
US crude production dropped slightly to just under 13.6 million barrels per day, according to the government's weekly summary. The four-week, and cumulative averages are just over 13.6 million barrels a day, up slightly from a year ago.
The Energy Department swapped another 4.1 million barrels from the Strategic Petroleum Reserve into the marketplace this week, as part of the international effort to hedge against rising crude prices. SPR now tops off at 405 million barrels.
Commercial inventories are up two million barrels from a week ago at just over 465 million. That's five percent higher than a year ago, and about three percent higher than the five-year seasonal average.
Crude production in North Dakota rose slightly, but remains over 1.12 million barrels a day, which remains the third-best state production average in the country. The Department of Mineral Resources reports operators in the state reduced the amount of natural gas burned off at oil wells by more than 13 percent. The statewide gas-capture rate is 95.8 percent, up from 95.3% the month before. Natural gas production in the state drops by two percent.