Masters Of War

Come you masters of war You that build all the guns You that build the death planes You that build all the bombs You that hide behind walls You that hide behind desks I just want you to know I can see through your masks. You that never done nothin' But build to destroy You play with my world Like it's your little toy You put a gun in my hand And you hide from my eyes And you turn and run farther When the fast bullets fly. Like Judas of old You lie and deceive A world war can be won You want me to believe But I see through your eyes And I see through your brain Like I see through the water That runs down my drain. You fasten all the triggers For the others to fire Then you set back and watch When the death count gets higher You hide in your mansion' As young people's blood Flows out of their bodies And is buried in the mud. You've thrown the worst fear That can ever be hurled Fear to bring children Into the world For threatening my baby Unborn and unnamed You ain't worth the blood That runs in your veins. How much do I know To talk out of turn You might say that I'm young You might say I'm unlearned But there's one thing I know Though I'm younger than you That even Jesus would never Forgive what you do. Let me ask you one question Is your money that good Will it buy you forgiveness Do you think that it could I think you will find When your death takes its toll All the money you made Will never buy back your soul. And I hope that you die And your death'll come soon I will follow your casket In the pale afternoon And I'll watch while you're lowered Down to your deathbed And I'll stand over your grave 'Til I'm sure that you're dead.------- Bob Dylan 1963

Sunday, January 22, 2017

new OPEC report; US gasoline demand at a 35 mo low; largest rig increase in 45 months, DUCs increase

oil prices were little changed over the week, despite a sharp drop over the first 3 days and a subsequent recovery before the weekend....the February US oil contract, which closed last week at $52.37 a barrel, closed this week up a nickel at $52.42 a barrel, after trading as high as $52.90 on Friday, in a rally ahead of next week's OPEC compliance meeting that was cut short by a rig count report that showed the biggest jump in drilling since April 2013...meanwhile, the current oil chart is showing oil prices for March delivery at $53.22 a barrel, an apparent drop from the expiring February contract price .. natural gas prices closed the week 21.5 cents lower than last Friday, falling 4 out of the 5 days this week, only rallying by 6.2 cents on Thursday after the natural gas storage report showed a 243 billion cubic feet drop in supplies, which left us with 12.9% less natural gas in storage than the same week last year, and 2.6% below the 5 year average..  there were two monthly reports released this week, the current oil market report from OPEC and the drilling productivity report from the EIA, that we're going to want to take a look at today, and as usual, we'll also look at the weekly EIA oil data & the Baker Hughes rig count...

we'll start by looking at a few tables from the OPEC Monthly Oil Market Report for January, which not only covers global oil supply and demand data for December, but also includes a global macroeconomic analysis, commodity prices, oil refining, tanker trade and inventories...this first table is from page 55 of the OPEC pdf and it shows oil production in thousands of barrels per day for each of the OPEC members over the recent years, quarters and months as the column headings are labeled...for all their official business, OPEC uses "secondary sources", such as analyst's reports from satellites and shipping data, as an impartial adjudicator for their for their quotas and production cuts, to resolve any potential disputes that might arise if each member reported their own figures...this is also the data you'll usually see quoted in the media, except for independent analysis by energy research divisions of organizations such as Platts and Reuters that'll have their own numbers..

January 18 2017 December OPEC production

here we see that the official data shows that OPEC production was down by 220,900 barrels per day in December, from a November oil production total that was revised 174,000 barrels per day higher from what was reported last month...(for your reference, here is the November table before revisions; one major difference to note is that Indonesia, who would not agree to production cuts, is no longer a member of OPEC and hence their totals are not included in the new table above)....we can see that three countries accounted for most of the December drop, according to these official totals; Saudi Arabia, whose output fell 149,300 barrels per day from November's record high, Nigeria, who's output fell by 113,500 barrels per day, presumably due to ongoing civil strife, and Venezuela, whose output fell 45,200 barrels per day as the country continues to unravel in the face of the economic war waged against it by the US and its allies.. 

the next table, also from page 55 of the OPEC pdf, shows the oil production that each of the members reported to OPEC (for those that did report)...this data is considered suspect because of the many incentives OPEC members have to fudge their data, and is rarely reported by the media, and we would also have ignored it as well if it weren't for a few rather large discrepancies vis a vis the official data...first, Kuwait is reporting their output was 56,000 barrels per day lower, which we'd consider a normal claim in the face of expected cuts...but notice Nigeria; they reported their output rose 403,900 barrels per day, rather than falling by 113,500 barrels per day as the official secondary sources reported...i have no way of judging the accuracy of either, but a discrepancy of over half a million barrels per day is enough to swing the OPEC output reduction of  220,900 barrels per day into an increase of a similar magnitude... 

January 18 2017 December OPEC production.B

a major reason for the brief collapse in oil prices in the middle of this week was comments from Saudi Oil Minister of Energy Khalid Al-Falih that OPEC would likely be wrapping up their production cuts after June, which quite obviously suggested that we'd be back into a glut situation by this summer...while he later walked back that idea once he saw oil prices falling, that the Saudis would want to increase their oil production again so soon brought to mind what we pointed out when the cuts were first proposed; that is, that they had already ramped up their production so much this summer that the supposedly steep cuts in production would only take them back to their output levels of March and April of this past year...let's look at a longer term chart of Saudi Arabian oil production and see if we can figure out what's going on...

January 18 2017 Saudi oil production

the above graph, taken from a detailed post on this December OPEC data at the Peak Oil Barrel blog, shows total oil production, in thousands of barrels per day, for Saudi Arabia over the period from January 2005 to December 2016...it's well known that the Saudis typically ramp up their oil production in the summer months for their own use, as most of the Saudi cities are air conditioned, with two thirds of their electrical generation petroleum based...to help you see that, i have colored the oil output dot for each July on this chart red...you can thus see that for most years, oil production rose in the summer and then fell in the winter (with the obvious exception of the global financial crisis years of 2009 and 2010), with an especially strong pattern over the past 5 years...thus, by pushing for OPEC cuts during the winter, they get credit for cutting back at a time of year when they would have done so otherwise anyhow, and now they want to ramp back up to normal production again when the heat is on, all the while looking like they're controlling the market..

we'll include one more oil production chart, for the other elephant in the oil room, Russia...the following graph, also in thousands of barrels per day, is for Russian oil production over the period from January 2013 to December 2016, and it's also from that post on December OPEC data at the Peak Oil Barrel blog, although this chart was included in the comment section by the post's author, Ron Patterson...this graph also seems to be from secondary sources, since Russia themselves reported their December oil production at a record 11,210,000 barrels per day, but whatever the case, it's obvious that Russian production over the past four months was well in excess of their historical level, and so far in January, they're reportedly only down by about 100,000 barrels per day...according to the negotiated deal with OPEC and other oil producers, Russia is committed to an eventual cut of 300,000 barrels per day from their November level...but even if they achieve that, they'll still be producing 100,000 barrels per day more than their average production of the first 8 months of 2016

January 20 2017 Russian oil production

The Latest Oil Stats from the EIA

this week's oil data for the week ending January 13th from the US Energy Information Administration showed that our imports of crude oil were down to a near normal level after last week's 4 year high, while our oil refining was also scaled back from last week's record by nearly the same amount, so a small surplus of crude was again added to our stored supplies...our imports of crude oil fell by an average of 674,000 barrels per day to an average of 8,378,000 barrels per day during the week, while at the same time our exports of crude oil fell from last week's record of 727,000 barrels per day to an average of 704,000 barrels per day, which meant that our effective imports netted out to 7,674,000 barrels per day for the week...at the same time, our crude oil production slipped by 2,000 barrels per day to an average of 8,944,000 barrels per day, which means which means that our daily supply of oil, from net imports and from wells, totaled 16,618,000 barrels per day for the week...

meanwhile, refineries reportedly used 16,468,000 barrels of crude per day during the week, a decrease of 639,000 barrels per day from last week's record, while at the same time, 335,000 barrels of oil per day were being added to oil storage facilities in the US...thus, this week's EIA figures seem to indicate that we consumed or stored 185,000 more barrels of oil per day than were accounted for by our oil imports and production…therefore, the EIA inserted that phantom 185,000 barrels per day number into the weekly U.S. Petroleum Balance Sheet (line 13) to make it balance out...the EIA footnote to that line 13 says that number represents "unaccounted for crude oil", which is further described in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil."...as you know, we've been calling that number that's inserted into the data to make oil balance out the EIA's weekly oil fudge factor...

that same weekly Petroleum Status Report tells us that the 4 week average of our oil imports was virtually unchanged at an average of 8.2 million barrels per day, now 4.5% higher than the same four-week period last year...our crude oil production for the week ending January 13th was 3.2% lower than the 9,235,000 barrels of crude that we produced during the week ending January 15th of last year, and 6.9% below our June 5th 2015 record oil production of 9,610,000 barrels per day...this week's 2,000 barrels per day decrease was in Alaskan production, as oil output in lower 48 states was unchanged from the prior week..

US refineries operated at 90.7% of capacity in using those 16,468,000 barrels of crude per day, down from 93.6% of capacity the prior week, but not much changed from the 90.6% capacity utilization during the same week a year ago, even though they refined 1.7% more crude per day this week than they did during the same week last year...gasoline production from those refineries fell by 719,000 barrels per day to 8,953,000 barrels per day during the week ending January 13th, its lowest in 53 weeks, and hence was 5.2% lower than the 9,453,000 barrels per day of gasoline that were produced during the week ending January 15th a year ago, and 2.8% lower than the 9,215,000 barrels per day of gasoline produced during the week ending January 16th, 2015... meanwhile, refineries' output of distillate fuels (diesel fuel and heat oil) fell by 611,000 barrels per day to 4,713,000 barrels per day, following two weeks of near record high distillates production...thus our distillates production was still up by 3.5% from the 4,552,000 barrels per day that were being produced during the week ending January 15th last year, but 1.2% lower than the 4,768,000 barrels per day of distillates produced during the same week of 2014...     

even with the big drop in our gasoline production, the EIA reported that our gasoline supplies rose by 5,591,000 barrels to 240,473,000 barrels as of January 13th, for what is now a three week jump of nearly 19 million barrels in our gasoline inventories...that happened as our domestic consumption of gasoline fell by 401,000 barrels per day to a 35 month low of 8,069,000 barrels per day, following two prior weeks of the lowest gasoline demand in a year..(our gasoline exports and our gasoline imports were both down by similar amounts and hence made little difference in the week's surplus) ...since we now have an unusually sharp, if seasonal, drop in gasoline demand, we'll include a graph of what that looks like..

January 19 2017 gasoline demand

the graph above was taken from the bottom of the gasoline page from the EIA's "This Week in Petroleum" and it basically shows the four week moving average of US gasoline consumption over the past two years, with February 2015 to February 2016 in brown, and February 2016 to the most recent week in blue...what's obvious here is that gasoline consumption was running well ahead of the prior year's pace for most of 2016, until it slipped slightly below the 2015 levels in November and December.....now, as you can see, the past three consecutive weeks of low demand has dropped that 4 week average to well below last year's pace, and is in fact at the lowest it's been since the winter of 2014...it's possible the ice storms that moved through the middle of the country curtailed driving in the reference week, but that in itself should not drop gasoline demand over a 4 week period to a three year low, especially when compared to previous winters with their own periods of hazardous driving...but even with low gasoline usage, and after three large inventories increases in row, our gasoline inventories as of January 13th were just 0.6% higher than the  244,997,000 barrels of gasoline that we had stored on January 15th of last year, and 2.3% above the 240,922,000 barrels of gasoline we had stored on January 16th of 2015...

meanwhile, the big drop in distillates production lowered our supplies of distillate fuels by 968,000 barrels to 169,073,000 barrels by January 13th, following a 2 week jump of 18.4 million barrels, the largest two week jump in distillates supplies on record...the amount of distillates supplied to US markets, a proxy for our consumption, was up by 897,000 barrels per day to 4,095,000 barrels per day, or else we would have added even more...thus our distillate inventories are still 2.8% higher than the distillate inventories of 164,529,000 barrels of January 15th last year, and 23.8% above the distillate inventories of 136,579 ,000 barrels of January 16th, 2015…

finally, even with big drop in oil imports, there was a decrease in the amount of oil we refined of nearly the same magnitude, which meant we again had extra oil to store, and hence our inventories of crude oil rose by 2,347,000 barrels to 485,456,000 barrels by January 13th, a level which was was still  5.2% below the April 29th record of 512,095,000 barrels...nonetheless, we still ended the week with 6.7% more crude oil in storage than the 455,169,000 barrels we had stored January 15th of 2016, and 33.3% more crude than the 364,266,000 barrels of oil we had in storage on January 16th of 2015... 

This Week's Rig Count and December Drilling Productivity Report

US drilling activity increased during the week ending January 20th, with drilling rigs seeing the largest increase in 45 months, after falling last week for the first time in 11 weeks...Baker Hughes reported that the total count of active rotary rigs running in the US increased by 35 rigs to 694 rigs in the week ending on this Friday, which was up by 57 rigs from the 637 rigs that were deployed as of the January 22nd report last year, but still down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...at the same time, drilling activity in Canada rose by 24 more rigs to 342 rigs, so they're now up from just 205 rigs two weeks ago, and well ahead of last year's 250 rig deployment...

US rigs drilling for oil increased by 29 rigs to 551 rigs during the week, so oil rigs are now at their highest since November 25th 2015...oil drilling is also up from the 510 oil directed rigs that were working in the US on January 22nd last year, while down from the recent high of 1609 oil rigs that were drilling on October 10, 2014.....at the same time, the count of US drilling rigs targeting natural gas formations increased by 6 rigs to 142 rigs, which is up from the 127 natural gas directed rigs that were in use a year ago, while it is still way down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, 2008... 

one drilling platform that had been drilling offshore from Louisiana in the Gulf of Mexico was shut down this week, which reduced the Gulf of Mexico rig count to 23, which was down from 29 rigs working in the Gulf a year ago…our total offshore count for the week was still at 24 rigs, with the ongoing drilling operation that was still in the offshore waters of Alaska, but our total offshore was still down from last year's offshore US total of 29 rigs...

the number of horizontal drilling rigs working in the US increased by 22 rigs to 559 rigs this week, which is now up from the 500 horizontal rigs that were in use in the US on January 22nd last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, 12 vertical rigs were added to those active, increasing the vertical rig count to 75, which was still down from the 77 vertical rigs that were deployed during the same week last year...in addition, the directional rig count was up by 1 rig to 60 rigs as of January 20th, which brought the directional rig count even with last January 22nd's directional of 60 directional rigs...

as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of January 20th, the second column shows the change in the number of working rigs between last week's count (January 13th) and this week's (January 20th) count, the third column shows last week's January 13th active rig count, the 4th column shows the change between the number of rigs running this Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for January 22nd of 2016...        

January 20 2017 rig count summary

as you can see above, rigs were added in all of the most active basins except for the Denver-Julesburg-Niobrara, which although unchanged at 23 rigs is still up from the 19 rigs working there a year ago...again, the Permain led with a 13 rig increase, and thus at 281 rigs they account for more than half of the horizontal drilling going on in the US right now...also back above year ago activity levels is the Cana Woodford in Oklahoma, where 9 more rigs were set up this week...i'm sure you'll note the 3 rig increase in the Utica shale as well, which at 23 rigs is also well ahead of the 14 rigs drilling in the Utica last January 22nd....since there was only only a two rig increase in Ohio, we'd assume that the other new Utica drilling is in Pennsylvania, while the new Marcellus drilling is in West Virginia...note that in addition to the state changes shown in the first table above, Alabama also saw a rig start up this week, probably the same one that shut down last week.. the single rig they have active now matches their count of a year ago...Mississippi drillers also added a rig; they now have 3 acive, down from 6 a ear ago

we also want to make note of the Drilling Productivity Report for December, which to our surprise showed another increase in uncompleted wells nationally, mostly as a result of dozens of newly drilled but uncompleted wells (DUCs) in the Permian...we had expected that with higher oil prices, some of the DUC well backlog would be completed, but current report showed that completion of wells slowed even as the drilling rig count rose, as the total count of DUCs in the US rose from 5,212 in November to 5,379 in December....since DUC wells were at 5,097 in September, we've thus had an increase of 282 uncompleted wells over that 3 month span, after a 6 month run when more wells were being completed than were being drilled...all of the December DUC increases were oil wells; the Permian basin, which includes the Wolfcamp and several other shale plays in EIA stats, saw its total count of uncompleted wells rise from 1,569 in November to 1,706 in December, in keeping with the increase in drilling that we've seen in that basin...at the same time, DUCs in the Niobrara chalk of the Rockies front range rose by 30, from 674 in November to 704 in December...on the other hand, the Marcellus saw a decrease in DUCs (which means more wells were being fracked than were being drilled) as the Marcellus DUC count fell from 627 in November to 617 in December...in addition; the Utica showed a decrease of six uncompleted wells and thus had only 99 DUCs remaining in December...for the month, DUCS in the 4 oil basins (ie the Bakken, Niobrara, Permian, and Eagle Ford) increased by 180 wells, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) fell by 13 wells, as they have generally declined since December 2013, as new natural gas drilling fell to record low levels and has barely recovered.... 



note: there's more here..

Trump To 'Return America To Americans'

Sunday, January 15, 2017

US oil imports highest since Sept 2012, oil refining at all time high, US rigs down, global rigs up, Canadian rigs up 110

the OPEC inspired oil rally finally ran out of steam this week, as oil prices retreated for the first time in 5 weeks, and by the most in 11 weeks...after closing at $53.99 a barrel last Friday, oil prices fell all day long on Monday, after news of record-high exports from Iraq's southern crude terminals spread doubt about the effectiveness of the OPEC production cuts, leading to a reversal of speculative bets by hedge funds and other money managers, which ultimately pushed crude for February delivery $2.03 lower, as it ended the day at $51.96 a barrel....crude prices continued to slump on Tuesday as oil production from Nigeria jumped and Kuwait's oil minister suggested other non-compliance with OPEC's cuts, and went on to close at $50.82 a barrel, after the announcement that the US will sell 8 million barrels of oil from the Strategic Petroleum Reserve later this month, with delivery in February....oil prices then steadied on Wednesday morning and then turned around to rise more than $1.50 Wednesday afternoon, despite the EIA report of massive builds in supplies of oil, gasoline and distillates and the largest jump in US oil production in 20 months, after the Saudi oil minister said they cut oil production to below 10 million barrels per day and planned to cut deeper cut in February, which would put them more than 100,000 barrels per day below their promised target and 625,000 barrels per day below their recent output high...after closing Wednesday at $52.25 a barrel, oil prices continued rising on that Saudi news Thursday and closed higher at $53.01 a barrel, before the doubts about OPEC compliance crept back in on Friday, and oil prices then dropped back to close the week at $52.37 a barrel, 3.0% lower than last week's close, amid concerns about the biggest drop in Chinese exports since 2009 and what impact that slowdown would have on their demand for crude...

natural gas prices, on the other hand, made a round trip this week, diving to their lowest level since mid-November on Monday, and then regaining most of the prior week's losses over the rest of the week...after rising to a high of $3.93 per mmBTU on the Wednesday after Christmas, natural gas prices had slid more than 45 cents last week to $3.285 per mmBTU, after forecasts for an arctic cold spell faded...facing further forecasts of warmer than anticipated weather conditions for January, natural gas prices fell another 18.2 cents on Monday of this week, ending at $3.103 per mmBTU...that drop was almost completely reversed on Tuesday, as natural gas prices rose 17.5 cents to close at $3.278 per mmBTU, on the possibility of cooler temperatures late January to early February...natural gas prices then reversed again to edge lower on Wednesday, closing at $3.224 per mmBTU, as exceptionally warm weather continued to weigh on the market....natural gas prices then jumped 16.2 cents on Thursday, closing the day at $3.386 per mmBTU, after the EIA's Weekly Natural Gas Storage Report indicated a larger than expected drop of 151 billion cubic feet (Bcf) of gas in storage during the week ending January 6th, which left our natural gas supplies at 3,160 billion cubic feet, 10.3% lower than a year ago but still close to the 5 year average for the fist week in January...natural gas then opened 2 cents lower on Friday as traders incorporated milder weather into their forecasts, but then went on to close more than 3 cents higher at $3.419 per mmBTU, as a couple of weather models added some risk that heating demand could return to seasonal averages by the end of the month...

The Latest Oil Stats from the EIA

this week's oil data for the week ending January 6th from the US Energy Information Administration indicated a jump to a 4 year high in our imports of crude oil and a increase to a new record high in our oil refining, which was still not enough to use all those extra oil imports, leaving our supplies of crude oil quite a bit higher than the prior week...our imports of crude oil rose by an average of 1,869,000 barrels per day to an average of 9,052,000 barrels per day during the week, the most oil we've imported since September, 2012, while at the same time our exports of crude oil rose by an average of 41,000 barrels per day to an average of 727,000 barrels per day, which meant that our effective imports netted out to 8,325,000 barrels per day for the week...at the same time, our crude oil production rose by 176,000 barrels per day to an average of 8,946,000 barrels per day, which means the daily supply of crude oil from imports and wells totaled 17,271,000 barrels per day during the week, 2 million barrels more than the prior week...

refineries reportedly used 17,107,000 barrels of crude per day during the week, an increase of 418,000 barrels per day from the last week of 2016, while at the same time, 585,000 barrels of oil per day were being added to oil storage facilities in the US...thus, this week's EIA figures seem to indicate that we consumed or stored 421,000 more barrels of oil per day than were accounted for by our increased oil imports and production…therefore, the EIA inserted that phantom 421,000 barrels per day number into the weekly U.S. Petroleum Balance Sheet (line 13) to make it balance out...the EIA footnote to that line 13 says that number represents "unaccounted for crude oil", which is further described on page 61 in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil."...as you know, we've been calling that number that's inserted to make oil balance the EIA's weekly oil fudge factor...

that same weekly Petroleum Status Report tells us that the 4 week average of our oil imports rose to an average of 8.2 million barrels per day, now 6.3% higher than the same four-week period last year...our crude oil production for the week ending January 6th was 3.0% lower than the 9,227,000 barrels of crude that we produced during the week ending January 8th of last year, and 6.9% below our record oil production of 9,610,000 barrels per day that we saw during the week ending June 5th 2015...interestingly, this week's big oil production increase all came by way of the lower 48, as Alaskan production was down by 14,000 barrels per day...that suggests that oil prices over $50 a barrel the past 7 weeks has been bringing on additional completions of DUC (drilled, but uncompleted) wells..

US refineries operated at 93.6% of capacity in using those 17,107,000 barrels of crude per day, up from 92.0% of capacity the prior week, to hit a utilization level only reached once in 2016, during the first week of September during 2016...during the same week last year, refineries had consumed 684,000 fewer barrels of crude per day than they did this week, while running at 91.2% of capacity...gasoline production from US refineries rose by 199,000 barrels per day to 9,666,000 barrels per day during the week ending January 6th, which was 9.6% more than the 8,820,000 barrels per day of gasoline produced during the week ending January 8th a year ago, and 5.9% more than the 9,125,000 barrels per day of gasoline produced during the week ending January 9th, 2015, as there is normally a slowdown in gasoline output at this time of year...meanwhile, refineries' output of distillate fuels (diesel fuel and heat oil) actually fell by 5,000 barrels per day to 5,324,000 barrels per day, following the prior week's record high for distillates production...thus our distillates production was still up by 11.8% from the 4,760,000 barrels per day that was being produced during the week ending January 8th last year, and 4.2% higher than the 5,108,000 barrels per day of distillates produced during the same week of 2014...     

with the increase in our gasoline production, the EIA reported that our gasoline supplies rose by 5,023,000 barrels to 240,473,000 barrels as of December 30th, for a two week jump of 13.33 million barrels in our gasoline inventories...that was as our domestic consumption of gasoline rose by just 5,000 barrels per day from last week's one year low to 8,470,000 barrels per day, and as our gasoline imports fell 39,000 barrels per day to 683,000 barrels per day while our gasoline exports fell by 15,000 barrels per day to 981,000 barrels per day...even with the back to back large increases, however, our gasoline inventories as of January 6th were little changed from 240,434,000 barrels of gasoline that we had stored on January 8th of last year or the 240,334,000 barrels of gasoline we had stored on January 9th of 2015..

in addition to the near record two week jump in gasoline supplies, our supplies of distillate fuels also rose, increasing by 8,356,000 barrels to 170,041,000 barrels by January 6th, following the prior week's increase of 10,051,000 barrels, which looks to be the largest two week jump in distillates supplies on record...the amount of distillates supplied to US markets, a proxy for our consumption, was up from last weeks record low by 175,000 barrels per day to 2,792,000 barrels per day, but still remained well below normal, while our exports of distillates fell 165,000 barrels per day to 1,035,000 barrels per day, which was somewhat below the average of last year....after the two weeks of oversized increases, our distillate inventories are now 2.7% higher than the distillate inventories of 165,554,000 barrels of January 8th last year, and 21.6% above the distillate inventories of 139,851,000 barrels of January 9th, 2015…

finally, even though we refined a record amount of crude oil, our oil imports were even higher, and as a result our inventories of surplus crude oil rose by 4,097,000 barrels to 483,109,000 barrels by January 6th, a level which was was still  5.7% below the April 29th record of 512,095,000 barrels...nonetheless, we still ended the week with 7.1% more crude oil in storage than the 451,190,000 barrels we had stored January 8th of 2016, and 36.4% more crude than the 354,195,000 barrels of oil we had in storage on January 9th of 2015... furthermore, even though our supplies of residual fuel oil fell by 627,000 barrels to 41,846,000 barrels and our supplies of propane/propylene fell by 4,464,000 barrels to 79,659,000 barrels during this same week, our total supplies of crude and refined products rose by 13,436,000 barrels to 2,030,421,000 barrels during the week ending January 6th, the largest weekly increase since the week ending April 3rd of 2015...

This Week's Rig Count

US drilling activity slowed down for the first time in 11 weeks during the week ending January 13th, in what seems to be a chance anomaly rather than a basic change in drilling intentions...Baker Hughes reported that the total count of active rotary rigs running in the US fell by 6 rigs to 659 rigs in the week ending this Friday, which was still up by 9 rigs from the 650 rigs that were deployed as of the January 15th report last year, but still down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...at the same time, drilling activity in Canada rose by 110 rigs, from 205 rigs a week ago to 315 rigs this week, an increase of more than 50%, which left them well ahead of last year's 227 rig deployment...

rigs drilling for oil in the US decreased by 7 rigs to 522 rigs during the week, only the 2nd retreat in oil drilling in the past 28 weeks...but oil drilling is still up from the 515 oil directed rigs that were working in the US on January 15th last year, while down from the recent high of 1609 oil rigs that were drilling on October 10, 2014...Canadian oil drilling increased by 89 rigs to 170 rigs, which was way up from the 110 oil rigs deployed in Canada on January 15th of 2016...at the same time, the count of US drilling rigs targeting natural gas formations increased by 1 rig to 136 rigs, which has now pushed US natural gas drilling above the 135 natural gas rigs that were in use a year ago, while it was still way down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, 2008... Canadian rigs targeting natural gas increased by 21 rigs to 144 rigs, also up from the 117 natural gas rigs running in Canada a year earlier...one US rig and one Canadian rig that were classified as miscellaneous also remained active, compared to a year ago, when no such miscellaneous rigs were deployed..

another drilling platform began working offshore from Louisiana in the Gulf of Mexico this week, which brought the Gulf of Mexico rig count up to 24, still down from 26 rigs working in the Gulf a year ago..another drilling operation was still ongoing in the offshore waters of Alaska, which means our total offshore count for the week was 25 rigs, also down from last year's offshore US total of 26...however, the last platform that had been drilling through an inland lake in southern Louisiana was shut down this week, so there are now no active rigs in the inland waters category remaining, down from 1 rig on inland waters a year ago..

the number of horizontal drilling rigs working in the US increased by 3 rigs to 537 rigs this week, which is now up from the 511 horizontal rigs that were in use in the US on January 15h last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, two directional rigs were added to those active, increasing the directional rig count to 59, which was still down from the 62 directional rigs that were deployed during the same week last year...however, the vertical rig count fell by 11 rigs to 63 rigs as of January 13th, which left the vertical rig count down from last year's deployment of 77 vertical rigs...

as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of January 13th, the second column shows the change in the number of working rigs between last week's count (January 6th) and this week's (January 13th) count, the third column shows last week's January 6th active rig count, the 4th column shows the change between the number of rigs running this Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this case was for January 15th of 2016...       

January 13 2017 rig count summary

as you can see from the tables above, the US drilling pullback was fairly widespread, with 6 different states (plus Alabama) and 8 different basins seeing rigs shut down...but as we saw from the Canadian count increase, there does not seem to be a fundamental or economic reason for US drillers to be shutting down rigs this week, so until we hear.otherwise, we've got to consider this week's report anomalous, an odd circumstance wherein several drillers in several states just happened to be shutting down rigs at the same time...at least Ohio was included in that, as we're now back down to 19 rigs, which was still up from 13 rigs a year ago...and as we mentioned, Alabama, which is not included above, also shed a rig this week, and now they have none, an improvement from a year ago, when they had one rig deployed..

International Rig Counts for December

Baker Hughes also released the international rig counts for December earlier this week, which unlike the weekly North American count, is an average of the number of rigs that were running in each country during the month, rather than the total of those rig drilling at month end....Baker Hughes reported that an average of 1,772 rigs were drilling for oil and natural gas around the globe in December, which was up from the 1,678 rigs that were drilling around the globe in November, but down from the 1,969 rigs that were working globally in December of last year...increased North American drilling again accounted for most of the global increase, as the average US rig count rose from 580 rigs in November to 634 rigs in December, which was still down from the average of 714 rigs that were working in the US in December a year ago, while the average Canadian rig count rose from 173 rigs in November to 209 rigs in December, which was also up from the 160 Canadian rigs that were deployed in December a year earlier....outside of Northern America, the International rig count rose by 4 rigs to 929 rigs in November, which was still down from 1,095 rigs a year ago, as increases in drilling in Latin America and Eastern Asia more than offset a decrease in Middle East activity.. 

drilling activity in the Middle East fell for the 8th time over the past 12 months, as the countries included in this region pulled out a net of 4 rigs, reducing their active rig average to 376 rigs for the month, which was also down from the 422 rigs deployed in the Middle East a year earlier....OPEC member Kuwait cut back from 47 rigs to 44, which was still up from the 43 rigs the Kuwaitis were running a year ago...the Saudis reduced their active rig fleet from 127 rigs to 125, which was also down from the 129 rigs the Saudis were running in December last year, but still up from the 112 rigs they were running in November of 2014, before their attempt to flood the global market...Dubai, an emirate in the United Arab Emirates, also cut their rig count by 2 rigs to 2, also down from 4 rigs in December a year ago...Oman, who is not an OPEC member but who has committed to a production cut of 45,000 barrels a day, also reduced their drilling by 2 rigs, from 61 rigs in November to 59 rigs in December, which left them well below the 73 rigs they were running in December a year ago...on the other hand, Egypt, who is not an OPEC number and who has not agreed to output cuts, added 2 rigs in December and thus had 24 rigs active, which was still down from the 44 rigs they were running a year earlier...in addition, OPEC members Qatar and Abu Dhabi both added a rig; that brought Qatar up to 10 rigs, also up from 7 a year earlier, and brought Abu Dhabi up to 48 rigs, which was still one less than their year ago total...and Israel, who's never had more than 1 rig running over the past two years, started up one rig in December, their first drilling activity since February...  

meanwhile, a three rig increase in the Latin American region masked a number of variances in the member states...the region saw its active rig count increase from 181 rigs in November to 184 in December, as their offshore count rose from 28 rigs to 32, while overall drilling was still down from 270 rigs in December of 2015, largely because the region had idled 92 rigs over the first 6 months of 2016...Brazilian and Colombian drillers, neither of whom are party to the production cuts, both added 3 rigs during the month; for Brazil, that brought their active rig count back up to 13 rigs, which was still down from the 38 rigs deployed in Brazil a year earlier, while for Columbia, their count rose to 19 rigs, up from the 12 rigs they had running a year earlier...OPEC member Ecuador and non-OPEC member Chile both added 2 rigs; for Ecuador, that lifted their active rig count to 7 rigs, up from 2 rigs a year earlier, while the Chilean count rose to 4 rigs, up from the 1 rig they were running a year earlier...OPEC member Venezuela started up one more rig and thus had 52 rigs running, still down from 70 rigs a year earlier, as did non-aligned drillers in Bolivia and Peru, where the rig counts rose to 5 rigs and 1 rig respectively, unchanged from a year ago for Bolivia but down from 2 rigs a year ago for Peru....Mexico, who has agreed to cut their oil output by 100,000 barrels a day, also added a rig; they now have 19 rigs active, which is well down from the 42 rigs they were running last December...almost offsetting all of those increases, however, was Argentina, where they cut their drilling activity from 70 rigs down to 59 rigs...that was down from 91 rigs a year ago, and from over 100 active rigs in Argentina in every prior month of 2015

in addition, drilling activity in the Asia-Pacific region increased by 4 rigs to 192 rigs in December, even as their offshore deployment fell from 92 rigs to 87, which was down from the 198 rigs working the region a year earlier, which only included 76 working offshore at that time....Australia added 5 rigs, bringing their total to 9 rigs active nationwide, which was still down from the 16 they were running a year earlier...Thailand and Indonesia both added 2 rigs, bringing their counts up to 12 rigs and 16 rigs respectively, which was down from 4 rigs last year for Thailand  and down from 25 rigs last year for Indonesia...the Philippines also started a rig, after having no activity in November, but they were still down from the 4 rigs they had deployed a year ago...on the other hand, China shut down 3 offshore rigs, leaving 25 offshore, same as they had running last December...at the same time, Brunei shut down both of the rigs they had active, while a year ago they had just one, and India reduced their rig count from 177 to 116 rigs, which was still up from the 100 rigs working in India a year earlier....

drilling activity also increased in Europe, rising by 2 rigs to 99 rigs, which was down from the 114 rigs working in Europe a year ago at this time, as their offshore drilling increased from 33 rigs to 35, same as they had offshore a year ago...the offshore increases were of one rig each offshore from Norway and the U.K., which brought the offshore counts in those countries up to 16 rigs and 11 rigs respectively, down from 17 last December for Norway but up from 9 offshore rigs a year ago for the U.K....other European countries adding land based rigs were Hungary and Albania, both of which increased to 2 rigs, same as each had a year earlier...meanwhile, both Bulgaria and the Netherlands shut down a rig; for Bulgaria, that left them with no drilling, down from 2 rigs a year earlier, and for the Netherlands, that left them with 2 rigs active, down from 4 rigs a year ago...

lastly, the African continent saw a net decrease of 1 rig in to 78 rigs in December, which left them down from the 91 rigs working in Africa last year at this time...the Congo Republic shut down all 3 rigs they had active in November, which was also their rig count a year ago...OPEC members Nigeria and Algeria shut down 1 rig each, leaving 4 rigs still drilling in Nigeria, down from 8 rigs a year ago, and leaving 52 rigs still working in Algeria, still up from 49 rigs a year ago....meanwhile, four African nations added 1 rig each: OPEC member Angola, Cameroon, Liberia and Kenya...that brought Angola back up to 4 rigs, still down from last year's 11; brought Cameroon back to 1 rig, same as a year ago, and brought Kenya back up to 11 rigs, same as a year earlier, while the new rig working in Liberia was their first drilling in 2 and a half years....finally, note that Iranian, Russian, and Chinese rig counts are not included in this Baker Hughes international data, although we did note that China's offshore area, with an average of 25 rigs active in December, were included in the Asian totals here...



note: there's more here:

Wednesday, January 11, 2017

Trump and Russia


Sunday, January 8, 2017

record distillates production, year high jump in gasoline & distillates supplies, drilling rigs now up from a year ago, et al

oil prices rose for the 4th week in a row this week, but only after clawing back from an opening day nosedive...after closing December 2016 at $53.72 a barrel, US oil prices shot up to well above $55 a barrel in early trading on Tuesday morning, hitting an 18 month high on the first day of the agreed to oil production cuts by OPEC and non-OPEC oil producers, as Arab media reported that Kuwait and Oman had cut their crude output...however, with other news from other OPEC members not forthcoming, oil traders grew nervous, and oil prices turned sharply lower by that afternoon, as the February contract price tumbled nearly $3 in a few hours before closing at $52.33 a barrel, a two week low...the OPEC rally resumed on Wednesday, and oil prices were further propelled higher to close at $53.20 a barrel after the American Petroleum Institute reported a 7.4 million barrel draw on U.S. crude oil inventories, the largest drop in US oil supplies since September...oil prices then slid on Thursday morning, as official US oil data showed a surprisingly large increase in U.S. gasoline and distillate inventories, but news that Saudi Arabia had cut production as they had agreed to sent prices back up in the afternoon, and they went on to close at $53.76 a barrel....oil prices then opened lower on Friday, after the release of weak economic reports on US employment and trade, but rose again on further signs of OPEC compliance, to end the week at 53.99 a barrel, up slightly from where it started...oil prices have thus increased 19.4% since the November 30th OPEC meeting, and will probably stay at these elevated levels as long as the OPEC/NOPEC production cuts are on the table...

natural gas prices, on the other hand, have no cartel controlling the supply, and when the weather forecast turns against them, as it did this week, natural gas prices plunge...you might recall that on Wednesday of last week, natural gas prices for January hit a two year high of $3.93 per mm-BTU (million British thermal units) before that contract expired, and then the February contract eventually fell to close the week at $3.743 per mmBTU...well, over the three day weekend, the long range weather forecast changed to indicate a shorter severe cold snap followed by much warmer winter temperatures, and as a result, natural gas prices opened the new year lower and dove 12% on Tuesday to end the day at $3.327 per mmBTU...that weather related price drop extended into Wednesday, as natural gas prices fell another 6 cents to close at a six-week low of $3.267 per mmBTU...gas prices then steadied on Thursday, closing the day at $3.273 per mmBTU,after the EIA's Weekly Natural Gas Storage Report indicated a decline of 49 billion cubic feet (Bcf) of gas in storage for the week ending December 30th, which left our gas supplies at 3,311 billion cubic feet, 9.9% less than a year ago...gas prices then closed higher for the second day in a row on Friday, rising 1.2 cents, or 0.4%, at $3.285 per mmBTU, after recovering after trading as low as $3.214/mmBtu earlier in the session...NOAA's climate prediction center continues to show expectations for a warmer than normal winter for much of the densely populated eastern areas of the country, so unless that should change, we'd expect natural gas prices will remain under pressure...

The Latest Oil Stats from the EIA

this week's reports on oil from the US Energy Information Administration were released on Thursday and are for the week ending December 30th...in the last week of 2016, our imports of crude oil were almost a million barrels per day lower than the prior week, while our refineries were consuming more oil than in any week since Labor Day, and hence they needed to draw a large amount of crude oil from storage to meet their needs...our imports of crude oil fell by an average of 984,000 barrels per day to an average of 7,183,000 barrels per day during the week, our lowest oil imports since the interruption cause by Hurricane Matthew...at the same time, our exports of crude oil rose by an average of 59,000 barrels per day to an average of 686,000 barrels per day, the 2nd most ever, which meant that our effective imports netted out to 6,497,000 barrels per day for the week...meanwhile, our crude oil production rose by 4,000 barrels per day to an average of 8,770,000 barrels per day, which means that our daily supply of oil, from net imports and from wells, totaled just 15,267,000 barrels per day for the week...

refineries reportedly used 16,689,000 barrels of crude per day during the week, an increase of 123,000 barrels per day from the week before Christmas, while at the same time, 1,007,000 barrels of oil per day were being pulled out of oil storage facilities in the US...thus, this week's EIA figures seem to indicate that we still consumed 415,000 more barrels of oil per day than were accounted for by our oil imports and production, and therefore the EIA inserted that phantom 415,000 barrels per day number into the weekly U.S. Petroleum Balance Sheet (line 13) to make it balance out...the EIA footnote to that line 13 calls it "unaccounted for crude oil", which is further described on page 61 in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil."...as you know, we've been calling that balance number the EIA's weekly oil fudge factor...

that same weekly Petroleum Status Report tells us that the 4 week average of our oil imports fell to an average of 7.8 million barrels per day, now just 0.5% higher than the same four-week period last year....our crude oil production for the week ending December 30th was still 4.9% lower than the 9,219,000 barrels of crude we produced during the week ending January 1st of last year, and 8.7% below our record oil production of 9,610,000 barrels per day that we saw during the week ending June 5th 2015...

US refineries operated at 92.0% of capacity in using those 16,557,000 barrels of crude per day, up from 91.0% of capacity the prior week, but still down from 92.5% of capacity during the same week a year ago, even though they refined 37,000 more barrels of crude per day this week than they did during the same week last year...however, gasoline production from those refineries fell by 1,071,000 barrels per day to 9,467,000 barrels per day during the week ending December 30th, from last week's record high of 10,537,000 barrels per day...nonetheless, this week's gasoline production was still 8.0% more than the 8,766,000 barrels per day of gasoline produced during the week ending January 1st a year ago, and 8.8% more than the 8,701,000 barrels per day of gasoline produced during the week ending January 2nd, 2015, so there's apparently a normal slowdown in gasoline refining at this time of year...and at the same time that gasoline output was falling, refineries' output of distillate fuels (diesel fuel and heat oil) was rising by 372,000 barrels per day to 5,329,000 barrels per day, which was a new record high for distillates production...thus our distillates production was up by 7.1% from the 4,976,000 barrels per day that was being produced during the week ending January 1st last year, and 2.9% higher than the 5,180,000 barrels per day of distillates produced during the same week of 2014...     

however, even with that big drop in our gasoline production, the EIA reported that our gasoline supplies rose by 8,307,000 barrels to 227,143,000 barrels as of December 30th, the biggest one week jump in gasoline inventories since last January, as our domestic consumption of gasoline fell by 813,000 barrels per day to 8,465,000 barrels per day, which was likewise our lowest gasoline consumption since last January...also contributing to this week's jump in our gasoline supplies was a 288,000 barrel per day increase to 722,000 barrels per day in our gasoline imports, while at the same time our gasoline exports fell by 153,000 barrels per day from last week's record high of 1,149,000 barrels per day...that increase kept our gasoline inventories as of December 30th 1.5% higher than the 231,996,000 barrels of gasoline that we had stored on January 1st of last year, while they were still 0.7% below the 237,163,000 barrels of gasoline we had stored on January 2nd of 2015..

moreover, at the same time as our gasoline supplies were jumping by 8.3 million barrels, our supplies of distillate fuels were also rising, increasing by 10,051,000 barrels to 152,378,000 barrels by December 30th...in addition to record refinery production, a major factor in that increase of distillates supplies was a 1,175,000 barrel per day drop to 2,792,000 barrels per day in the amount of distillates supplied to US markets, a proxy for consumption...now, that seems to be some kind of anomaly, because that's the lowest product supplied number for distillates since the week ending April 19, 1999, and we have seen a similar drop in that metric at this time of year each of the last 5 years...nonetheless, that, combined with record production of distillates and a 216,000 barrels per day drop from last week's record high of 1,416,000 barrels per day our exports of distillates, meant that we saw the largest one week jump in distillates supplies in two years...since both gasoline supplies and distillate supplies saw such large jumps this week, we'll include a graph here that will help us see what's going on...

January 7 2017 invenories as of December 30th

the two bar graphs above, taken from the Zero Hedge coverage of this week's EIA report, show the weekly change in gasoline and distillate inventories for each week of the last 3 years, with the bar graph for gasoline inventories on top and the bar graph for distillate inventories below that....within each graph, each red or green bar represents a weekly change in inventories over the past 3 years, with green bars indicating an addition to that inventory during the reference week, and red representing a withdrawal from that inventory for that week, with the size of the bars indicating the volume in barrels of the addition or withdrawal...in addition, a heavy green arrow has been added to each chart to indicate the number of weeks that have elapsed since an inventory addiction large as the current one has occurred ....thus on the gasoline graph we can see that large volumes of gasoline are typically added to storage during the winter months of November through February, while smaller withdraws from storage are made most weeks during the summer driving season...so this week's increase in gasoline supplies was not that unusual at all, as increases to gasoline inventories of that magnitude were obviously typical in each of the last three winters...we have a similar seasonality, but less regular, for distillate storage and withdrawal as shown in the lower graph...since refineries tend to step up distillate production during the winter months to meet heat oil demand, wintertime withdrawals aren't as severe as they otherwise might be, and when that increased winter distillates output coincides with a week of weak demand such as we saw this week, all that extra distillate production ends up heading for storage....thus we have the largest addition to distillate inventories since the 2nd week of January 2015, which leaves us with 1.4% more distillate inventories than we had on January 1st last year, and 18.1% above the distillate inventories of 136,926,000 barrels on January 2nd, 2015...…

finally, the big drop in our oil imports, combined with the increase in refining, meant that we had to pull crude oil out of storage to meet the refiner's needs, and hence our inventories of crude oil fell by 7,051,000 barrels to 479,012,000 barrels by December 30th, which was the lowest level for our crude supplies since February 19th of last year, and  6.4% below the April 29th record of 512,095,000 barrels...nonetheless, we still ended the week with 6.2% more crude oil in storage than the 450,956,000 barrels we had stored at the beginning of 2016, and 37.2% more crude than the 348,806,000 barrels of oil we had in storage on January 2nd of 2015...    

This Week's Rig Count

US drilling activity increased for the 10th week in a row and for the 15th time in the past 16 weeks during the week ending January 6th, although the pace of increase remains modest compared to that of the weeks immediately following the OPEC deal...Baker Hughes reported that the total count of active rotary rigs running in the US rose by 7 rigs to 665 rigs by this Friday, which was up by 1 from the 664 rigs that were deployed as of the January 8th report last year, but still down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014... 

rigs drilling for oil increased by 4 rigs to 529 rigs during the week, which was the most oil drilling rigs that have been in use since December 4th of 2015, as oil drilling activity has only retreated once in the past 27 weeks...oil drilling is now up from the 516 oil directed rigs that were working in the US on January 8th last year, but down from the recent high of 1609 oil rigs that were drilling on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations increased by 3 rigs to 135 rigs, which still left active gas rigs down from the 148 natural gas rigs that were in use a year ago, and down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, 2008... one rig that was classified as miscellaneous also remained active, compared to a year ago, when no such miscellaneous rigs were deployed..

a single drilling platform began working offshore from Louisiana in the Gulf of Mexico this week, which brought the Gulf of Mexico rig count up to 23, still down from 27 offshore rigs a year ago..another drilling operation was still ongoing in the offshore waters of Alaska, which means our total offshore count for the week was 24 rigs, also down from last year's offshore total of 27...the number of working horizontal drilling rigs increased by 2 rigs to 534 rigs this week, which is now up from the 519 horizontal rigs that were in use in the US on January 8th last year, but still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, four vertical rigs were added to those active, increasing the vertical rig count to 74, which was down from the 81 vertical rigs that were deployed during the same week last year..in addition, the directional rig count rose by 1 rig to 57 rigs as of January 6th, which still left the directional rig count down from last year's deployment of 64 directional rigs...

once again, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of January 6th, the second column shows the change in the number of working rigs between last week's count (December 30th) and this week's (January 6th) count, the third column shows last week's December 30th active rig count, the 4th column shows the change between the number of rigs running this Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this case was for January 8th of 2016...       

January 6th 2017 rig count summary

we do have an unusual change this week, in that 5 rigs were pulled out of the Granite Wash of the Texas-Oklahoma panhandle region, yet it's hard to tell where they came from at a glance, since the Oklahoma rig count is unchanged and the Texas rig count is up three...looking at the details on drilling in the individual Texas oil districts, we see that drilling in district 10, which is the panhandle region, was down from 11 rigs to 6 rigs, so that question is solved  ...in addition, it also appears that at least one of the 3 rig increase in New Mexico was in the Wolfcamp, in the western part of the Permian, since Texas details only shows a 2 rig increase in that basin...note that yet another gas-directed rig was also added in Ohio's Utica shale...that brings the Utica shale rig count up to 21, up from 14 a year ago...we could therefore say that with a 50% year over year increase, drilling in the Utica shale is increasing faster than in any other basin in the US, since the 58 rig increase in the Permian only represents a 28% jump...also note that of the states not shown among the major producers above, Indiana saw two rigs pulled out this week, leaving one still active in the state, whereas a year ago they had none, while Illinois drillers added a rig, their first activity in a while, which is still down from the 2 rigs that were deployed in Illinois last January 8th..



note: there's more here..

Sunday, January 1, 2017

an 18 mo high for oil, a 2 year high for nat gas; record gasoline production, but gasoline and distillates supplies down on record exports

prices for both oil and natural gas reached interim highs on Wednesday of this week before sliding lower, in trading volume that was about one-third of normal....after closing last week at $53.02 a barrel, prices for US oil rose steadily after the markets opened on Tuesday, closing 1.7% higher at $53.90 a barrel, as traders focused on the OPEC and non-OPEC production cuts that are set to begin next week...the OPEC inspired rally continued into Wednesday, with prices hitting $54.33 a barrel before getting knocked back when the American Petroleum Institute’s weekly report showed a 4.2 million barrel increase in commercial crude oil inventories, instead of the expected 1.5 million-barrel drawdown, but oil still closed at an 18-month high of $54.06 a barrel...prices continued to slide on Thursday, even though the EIA reported a much smaller 614,000 barrel increase in oil supplies, and ended the day down 29 cents at $53.77 a barrel...prices slipped again on Friday, amid profit taking before the long weekend, closing at $53.72 a barrel, and thus ended the year up 45%, in the largest annual increase since 2009...

prices for natural gas, meanwhile, rose from last week's close of $3.662 per mmBTU (million British thermal units) to $3.761 per mmBTU on Tuesday, as cold weather consumption continued to eat into inventories, with heating degree days running 11 percent above average and seasonal natural gas consumption up 21 percent from last year's levels...gas prices rose sharply again Wednesday, as forecasts called for even colder weather, with the expiring contract for January gas delivery increasing 16.9 cents, or 4.49%, to settle at a two year high of $3.93 per mm-BTU, while the more actively traded February contract rose 13.2 cents, or 3.51%, to close at $3.898 a mm-BTU....now trading for February delivery, natural gas prices wobbled on Thursday, even though the EIA's Weekly Natural Gas Storage Report showed that natural-gas stockpiles shrank by 237 billion cubic feet to 3360 billion cubic feet last week, which left our natural gas supplies 10.9% below the level of a year earlier, and 2.3% below the 5 year average for this time of year…prices then went on to close down 9.6 cents, or 2.5% lower, at $3.802 per mmBTU, as moderating weather forecasts had traders pulling back from prior price highs...natural gas prices then extended their decline on Friday, closing down roughly 1.4% at $3.743 per mmBTU, but were still up 59% for the year, in their largest annual increase since 2005..

The Latest Oil Stats from the EIA

this week's reports on oil for the week ending December 23rd from the US Energy Information Administration indicated a modest drop in our imports of crude from last week's elevated levels, while refining also fell back to below seasonal levels, which still left us with a small surplus of crude at the end of the week...our imports of crude oil fell by an average of 304,000 barrels per day to an average of 8,167,000 barrels per day during the week, after rising by 1,111,000 barrels per day the prior week...at the same time, our exports of crude oil rose by an average of 70,000 barrels per day to an average of 627,000 barrels per day, which meant that our effective imports netted out to 7,540,000 barrels per day for the week...meanwhile, our crude oil production fell by 20,000 barrels per day to an average of 8,766,000 barrels per day, which means that our daily supply of oil, from net imports and from wells, totaled 16,306,000 barrels per day for the week...

refineries reportedly used 16,557,000 barrels of crude per day during the week, a decrease of 101,000 barrels per day from the week ending the 16th, while at the same time, 88,000 barrels of oil per day were being added to oil storage facilities in the US...thus, this week's EIA figures seem to indicate that we ended up with 339,000 more barrels of oil per day than were accounted for by our oil imports and production, and therefore the EIA inserted that 339,000 barrels per day number into the weekly U.S. Petroleum Balance Sheet (line 13) to make it balance out...the EIA footnote to that line 13 calls it "unaccounted for crude oil", which is further described on page 61 in the glossary of the EIA's weekly Petroleum Status Report as "the arithmetic difference between the calculated supply and the calculated disposition of crude oil."...as you know, we've been calling that number the EIA's weekly fudge factor...

that same weekly Petroleum Status Report tells us that the 4 week average of our oil imports rose to an average of 8.075 million barrels per day, now 2.4% higher than the same four-week period last year....our crude oil production for the week of December 23rd was 4.7% lower than the 9,202,000 barrels of crude we produced during the week ending December 25th of last year, and 8.8% below our record oil production of 9,610,000 barrels per day that we saw during the week ending June 5th 2015...

US refineries operated at 91.0% of capacity in using those 16,557,000 barrels of crude per day, down from 91.5% of capacity the prior week and down from 92.6% of capacity during the same week a year ago, as they also refined 125,000 less barrels of crude per day than they did during the same week last year...nonetheless, gasoline production from those refineries rose by 387,000 barrels per day to a record high of 10,537,000 barrels per day during the week ending December 23rd, which was 6.2% more than the 9,921,000 barrels per day of gasoline produced during the week ending December 25th a year ago, and 3.4% more than the 10,195,000 barrels per day of gasoline produced during the week ending December 26th, 2014, which was also an all time record for gasoline output at that time...at the same time, refineries' output of distillate fuels (diesel fuel and heat oil) fell by 165,000 barrels per day to 4,957,000 barrels per day during the week ending December 23rd, which was still up a bit from the 4,927,000 barrels per day that was being produced during the week ending December 25th last year, but 6.6% lower than the 5,307,000 barrels per day of distillates produced during the same week of 2014...     

however, even with the record high in our gasoline production, the EIA reported that our gasoline supplies fell by 1,593,000 barrels to 227,143,000 barrels as of December 23rd, even as our domestic consumption of gasoline was little changed at 9,278,000 barrels per day...while our gasoline imports fell by 13,000 barrels per day to 434,000 barrels per day, our gasoline exports rose by 354,000 barrels per day to a record high of 1,149,000 barrels per day, which was only the 3rd time in history that our gasoline exports topped 1 million barrels per day...nonetheless, our gasoline inventories as of December 23rd were still 2.6% higher than the 221,420,000 barrels of gasoline that we had stored on December 25th of last year, but 0.8% lower than the 229,048,000 barrels of gasoline we had stored on December 26th of 2014...since our gasoline exports have suddenly jumped to heretofore unheard of levels, we'll include a graph of what that looks like below...

December 30 2016 gasoline exports for December 23

the above graph was taken from an article on this week's EIA report at Zero Hedge, and it shows weekly gasoline exports since late August and a staggered monthly estimate of our gasoline exports before that time, as the EIA itself only reported monthly estimates before then...you can see that for most of this year, our gasoline exports were in the 400,000 barrel per day range, never exceeding 500,000 barrels per day....however, as of September, our gasoline exports began to rise in a volatile manner, ultimately topping and remaining above 800,000 barrels per day since November...now we've topped 1,100,000 barrels per day of gasoline exports in two out of the last three weeks, and as a result our domestic supplies of gasoline continue to be drawn down, even as our refineries are producing gasoline at record levels...

moreover, at the same time as our gasoline supplies were being drawn down for export, so too were our supplies of distillate fuels, which fell by 1,881,000 barrels to 155,935,000 barrels by December 23rd, as our exports of distillates rose by 284,000 barrels per day to a record high of 1,416,000 barrels per day...now, unlike gasoline, exports of distillates over 1 million per day is not uncommon, as we've typically exported large quantities of distillates to Europe, where they use diesel powered automobiles, while importing gasoline from them, which European refineries had produced in excess of their needs...but still, we are now exporting distillates at record levels, and as a result what was once our large surplus of distillates has fallen 1.0% below the distillate inventories of 153,110,000 barrels of December 25th last year, while they still remain 20.6% above the distillate inventories of 125,721,000 barrels of December 26th, 2014…

finally, even though our oil imports fell from the prior week's elevated level, with the pullback in refining they were still enough to boost our inventories of crude oil by 614,000 barrels to 486,063,000 barrels by December 23rd,which was still 5.1% below the April 29th record of 512,095,000 barrels...but we still ended the week with 6.8% more crude oil in storage than the 455,106,000 barrels we had stored as of the same weekend a year earlier, and 37.7% more crude than the 352,979,000 barrels of oil we had in storage on December 26th of 2014...   

This Week's Rig Count

US drilling activity increased for the 9th week in a row and for the 14th time in the past 15 weeks during the week ending December 30th, although the pace of increase slowed from the double digit rig gains we saw in the prior three weeks....Baker Hughes reported that the total count of active rotary rigs running in the US rose by 5 rigs to 658 rigs by this Friday, which was still down from the 698 rigs that were deployed as of the December 31st report last year, and down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014... 

rigs drilling for oil increased by 2 rigs to 525 rigs during the week, which was the most oil drilling rigs that have been in use since December 31st last year, as oil drilling activity has only retreated once in the past 26 weeks...but oil drilling was still down from the 536 oil directed rigs that were working in the US on that date last year, and down from the recent high of 1609 oil rigs that were drilling on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations increased by 3 rigs to 132 rigs, which still left active gas rigs down from the 162 natural gas rigs that were in use a year ago, and down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, 2008... one rig that was classified as miscellaneous also remained active, in a change from a year ago, when no such miscellaneous rigs were deployed...

two offshore platforms that had been drilling in the Gulf of Mexico last week were shut down this week, leaving the Gulf of Mexico rig count at 25 rigs, down from 22 Gulf rigs a year ago...another drilling operation was still ongoing in the offshore waters of Alaska, which means our total offshore count for the week was 23 rigs, also down from last year's offshore total of 25...the number of working horizontal drilling rigs increased by 6 rigs to 532 rigs this week, which was still down from the 549 horizontal rigs that were in use in the US on December 31st last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, a single vertical rig was added to those active, increasing the vertical rig count to 70, which was down from the 89 vertical rigs that were deployed during the same week last year...meanwhile, the directional rig count fell by 2 rigs to 56 rigs as of  December 30th, which left the directional rig count down 4 rigs from last December 31st's deployment of 60 directional rigs...

once again, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of December 30th, the second column shows the change in the number of working rigs between last week's count (December 23rd) and this week's (December 30th) count, the third column shows last week's December 23rd active rig count, the 4th column shows the change between the number of rigs running this Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this case was for December 31st  of 2015...      

December 30 2016 rig count summary

obviously there were few changes this week, with oilfield activity probably slowed down by the holiday week...of the major producing states, only Kansas saw its lone rig shut down, while all the increases in drilling occurred in the states where most of the drilling was already taking place…note that Louisiana only netted zero because the two rigs that were pulled out of the Gulf of Mexico offset 2 land based rigs that were added in the southern part of the state...the basins seeing drilling increases were mostly the usual suspects, the Permian and Eagle Ford of Texas, the Granite Wash of the Texas-Oklahoma panhandle region, the Williston basin or Bakken shale in North Dakota, and the Cana Woodford of Oklahoma, home of the newer STACK and SCOOP plays...and other than what's shown in the table above, only Alabama saw its rig count drop from 2 rigs last week to 1 rig this week, unchanged quantitatively from a year ago, even though a year ago the only rig active in Alabama was offshore from the state, in its Gulf waters...



note: there's more here...