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, May 24, 2020

well completions fell 34.1% in April, leaving a 10.8 month backlog of DUC wells; horizontal drilling at a 14 year low

oil prices moved higher for a 4th consecutive week this week on a large drop in US crude supplies and ​on ​a continued easing of restrictions imposed in the wake of the coronavirus crisis....after rising 19% to $29.43 per barrel last week after the Saudis announced addition production cuts and the EIA reported the first drop in US crude supplies in sixteen weeks, the contract price of US light sweet crude for June delivery opened higher on Monday, a day before WTI June contract expiry, initially​ rose over 11% in ​​thin trading before settling $2.39 higher at $31.82 a barrel as production cuts and the easing of stay-at-home restrictions continued to support prices...with most traders already closed out of their June oil positions on fears that prices might again go negative, the June contract then expired another 68 cents higher at $32.50 on Tuesday, while the more actively traded July oil contract, which had ended last week priced at $29.52 and rose $2.13 on Monday, rose 31 cents on Tuesday to settle at $31.96 a barrel...with the price of WTI oil for July delivery now being quoted, oil prices extended their gains early Wednesday after the American Petroleum Institute reported a surprisingly large draw from US crude supplies, and then moved higher still to close up $1.53 at $33.49 a barrel on signs of improving demand after the EIA had confirmed the large drop in US crude supplies...prices then rose 43 cents to $33.92 a barrel on Thursday, the highest ​oil price since March, supported by lower U.S. crude inventories, OPEC-led supply cuts and recovering demand as governments eased restrictions imposed in the wake of the coronavirus pandemic...however, oil prices tumbled along with global equities on Friday on rising tensions between China and Washington over Hong Kong's autonomy and ended 67 cents, or 2% lower at $33.25 a barrel, as doubts set in about how quickly fuel demand would recover from the coronavirus crisis...despite the Friday selloff, oil prices still posted their fourth straight week of increases, with the July oil contract finishing with a 12.6% gain on the week..

​meanwhile, ​natural gas prices moved higher for the first time in four weeks as natural gas production fell to meet lower demand.. after falling 9.7% to $1.646 per mmBTU on milder weather and virus related demand destruction last week, the contract price of natural gas for June delivery opened 8 cents higher on Monday and surged to a 12.5% increase on a larger than expected production cut before pulling back to close 13.7 cents or 8% higher at $1.783 per mmBTU as producers shut wells and slashed spending on new oil drilling, ​thus ​reducing the associated gas output... gas prices ​then ​rose another 4.7 cents or 2.6% on Tuesday on a continuing slowdown in gas output to settle at $1.830 per mmBTU, their highest close since May 7th....however,  prices fell back 5.9 cents or 3% on Wednesday as government lockdowns to stop the spread of coronavirus reduced demand for the fuel and for exports, and then fell another 6.1 cents to $1.710 per mmBTU​ ​on Thursday after the EIA's latest storage data underwhelmed natural gas traders...natural gas prices then saw a modest 2.1 cent bump on Friday ahead of the holiday weekend to to finish at $1.731 per mmBTU, on forecasts for warmer weather and rising cooling demand through the first week of June, to end with a 5.2% gain on the week..

the natural gas storage report from the EIA for the week ending May 15th indicated that the quantity of natural gas held in underground storage in the US rose by 81 billion cubic feet to 2,503 billion cubic feet by the end of the week, which left our gas supplies 779 billion cubic feet, or 45.2% higher than the 1,724 billion cubic feet that was in storage on May 15th of last year, and 407 billion cubic feet, or 19.4% above the five-year average of 2,096 billion cubic feet of natural gas that has been in storage as of the 15th of May in recent years....the 81 billion cubic feet that were added to US natural gas storage this week matched the consensus forecast for a 81 billion cubic feet increase from a survey of analysts by S&P Global Platts, but was below the 87 billion cubic feet of natural gas that have been added to natural gas storage during the same week over the past 5 years, and also below the 101 billion cubic feet addition of natural gas to storage during the corresponding week of 2019... 

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending May 15th showed that due to a​ big increase in the amount of oil being ​used by our ​refine​ries, we had to withdraw oil from our stored commercial supplies of crude oil for the second time in 17 weeks​,​ and for the tenth time in the past thirty-six weeks...our imports of crude oil fell by an average of 194,000 barrels per day to an average of 5,197,000 barrels per day, after falling by an average of 321,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 286,000 barrels per day to an average of 3,239,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 1,958,000 barrels of per day during the week ending May 15th, 92,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells fell by 100,000 barrels per day to 11,500,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 13,458,000 barrels per day during this reporting week..

meanwhile, US oil refineries reported they were processing 12,903,000 barrels of crude per day during the week ending May 15th, 521,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that 443,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....so based on that data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 998,000 barrels per day more than what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (-998,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed...however, since the media treats these weekly EIA figures as gospel and since these numbers often drive oil pricing and hence decisions to drill for oil, we'll continue to report them, just as they're watched & believed as accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....   

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 5,401,000 barrels per day last week, now 24.6% less than the 7,166,000 barrel per day average that we were importing over the same four-week period last year....the 433,000 barrel per day net withdrawal from our total crude inventories came as 712,000 barrels per day were being withdrawn from our commercially available stocks of crude oil, while 269,000 barrels per day were being added to our Strategic Petroleum Reserve....this week's crude oil production was reported to be down by 100,000 barrels per day to 11,500,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was down by 100,000 barrels per day to 11,100,000 barrels per day, while a 15,000 barrel per day decrease in Alaska's oil production to 423,000 barrels per day had no impact on the rounded national total....last year's US crude oil production for the week ending May 17th was rounded to 12,200,000 barrels per day, so this reporting week's rounded oil production figure was about 5.7% below that of a year ago, yet still 36.4% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 69.4% of their capacity in using 12,903,000 barrels of crude per day during the week ending May 15th, up from 67.9% of capacity during the prior week, but still among the lowest refinery utilization rates of the last thirty years...hence, the 12,903,000 barrels per day of oil that were refined this week were 22.2% fewer barrels than the 16,578,000 barrels of crude that were being processed daily during the week ending May 17th, 2019, when US refineries were operating at a seasonally typical 89.9% of capacity....

even with the increase in the amount of oil being refined, gasoline output from our refineries was somewhat lower, decreasing by 331,000 barrels per day to 7,166,000 barrels per day during the week ending May 15th, after our refineries' gasoline output had increased by 792,000 barrels per day over the prior week....but since we​'​re still near multi-year lows in gasoline production, our gasoline output this week was 27.5% lower than the 9,883,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 88,000 barrels per day to 4,804,000 barrels per day, after our distillates output had decreased by 190,000 barrels per day over the prior week...after this week's decrease in distillates output, our distillates' production was 7.7% less than the 5,206,000 barrels of distillates per day that were being produced during the week ending May 17th, 2019....

even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the first time in 4 weeks and for the 5th time in 16 weeks, rising by 2,830,000 barrels to 255,724,000 barrels during the week ending May 15th, after our gasoline supplies had decreased by 3,513,000 barrels over the prior week...our gasoline supplies ​increased this week because the amount of gasoline supplied to US markets decreased by 608,000 barrels per day to 6,790,000 barrels per day, even as our exports of gasoline rose by 70,000 barrels per day to 244,000 barrels per day while our imports of gasoline rose by 40,000 barrels per day to 526,000 barrels per day....after this week's inventory increase, our gasoline supplies were 11.8% higher than last May 17th's gasoline inventories of 228,740,000 barrels, and roughly 10% above the five year average of our gasoline supplies for this time of the year...  

even with the decrease in our distillates production, our supplies of distillate fuels increased for the seventh time in 18 weeks and for the 12th time in 33 weeks, rising by 3,831,000 barrels to 158,832,000 barrels during the week ending May 15th, after our distillates supplies had increased by 3,511,000 barrels over the prior week....our distillates supplies rose by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 150,000 barrels per day to 3,668,000 barrels per day, and because our imports of distillates rose by 129,000 barrels per day to 322,000 barrels per day, while our exports of distillates rose by 145,000 barrels per day to 911,000 barrels per day....after this week's inventory increase, our distillate supplies at the end of the week were 25.6% above the 126,415,000 barrels of distillates that we had stored on May 17th, 2019, and about 19% above the five year average of distillates stocks for this time of the year...

finally, with increased refining and lower oil imports and crude production, our commercial supplies of crude oil in storage fell for the second time in seventeen weeks and for the twentieth time in the past 52 weeks, decreasing by 4,972,000 barrels, from 531,476,000 barrels on May 8th to 526,494,000 barrels on May 15th...but since we had just completed a run of 15 straight increases and three record increases over past 7 weeks, our crude oil inventories are still 10% above the five-year average of crude oil supplies for this time of year, and almost 48% above the prior 5 year (2010 - 2014) average of crude oil stocks as of the middle of May, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels, and continued rising from there....since our crude oil inventories have generally been rising over the past year and a half, except for during this past summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of May 15th were 10.4% above the 476,775,000 barrels of oil we had in commercial storage on May 17th of 2019, 20.2% above the 438,132,000 barrels of oil that we had in storage on May 18th of 2018, and 2.0% above the 516,340,000 barrels of oil we had in commercial storage on May 19th of 2017...  

furthermore, if we take the total of our commercial oil supplies and the stores of all the refined product made from oil, we find those supplies are now at a record high of 1,399,920,000 barrels, 9.2% more than the 1,281,538,000 barrel total of a year ago... 

This Week's Rig Count

the US rig count fell for the 11th week in a row during the week ending May 22nd, and is now down by 59.9% over that eleven week period....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 21 rigs to 318 rigs this past week, which was the fewest rigs deployed in Baker Hughes records going back to 1940, down by 665 rigs from the 983 rigs that were in use as of the May 24th report of 2019, and 1,611 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business....

the number of rigs drilling for oil decreased by 21 rigs to 258 oil rigs this week, after falling by 34 oil rigs the prior week, leaving oil rig activity at its lowest since July 10, 2009, which was also 560 fewer oil rigs than were running a year ago, and less than a sixth of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 79 natural gas rigs, but was still down by 107 natural gas rigs from the 186 natural gas rigs that were drilling a year ago, and less than a twentieth of modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Lake County, California... a year ago, there were no such "miscellaneous" rigs deployed..

the Gulf of Mexico rig count was unchanged at 12 rigs this week, with all of those Gulf rigs drilling for oil in Louisiana's offshore waters...that's ten fewer rigs than the rig count in the Gulf a year ago, when 20 rigs were drilling offshore from Louisiana and two rigs were operating in Texas waters...there are no rigs operating offshore elsewhere at this time, nor were there a year ago, so the Gulf rig count is equivalent to the national rig count, just as it has been since the onset of this past winter...

the count of active horizontal drilling rigs decreased by 22 rigs to 285 horizontal rigs this week, which was the fewest horizontal rigs active since May 26, 2006, and hence is a 14 year low for horizontal drilling...it was also 578 fewer horizontal rigs than the 863 horizontal rigs that were in use in the US on May 24th of last year, and about a fifth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count was down by 2 to 8 vertical rigs this week, and those were down by 43 from the 51 vertical rigs that were operating during the same week of last year....on the other hand, the directional rig count increased by 3 to 25 directional rigs this week, but those were still down by 44 from the 69 directional rigs that were in use on May 24th of 2019....

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the 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 May 22nd, the second column shows the change in the number of working rigs between last week's count (May 15th) and this week's (May 22nd) count, the third column shows last week's May 15th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of 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 the 24th of May, 2019...    

May 22 2020 rig count summary

as you can see, this weeks basin totals show a decrease of 19 rigs, which is 3 short of the number of horizontal rigs removed nationally this week, which would mean that three this week's horizontal drilling removals were from "other" shale basins not tracked separately by Baker Hughes...checking the rig losses in the Texas part of Permian basin, we find that 10 rigs were pulled out of Texas Oil District 8, while the rig count in other Texas Permian basins remained unchanged...since the national Permian rig total was down by 13 rigs, that means that the 3 rigs that were pulled out in New Mexico must have been drilling in the western Permian Delaware, to account for the overall Permian reduction of 13 rigs...elsewhere in Texas, two rigs were pulled out of Texas Oil District 1, which could account for the 2 rig reduction in Eagle Ford shale, which stretches in a relatively narrow band through the southeastern part of the state...in other states, the two rigs that were pulled out of North Dakota had been drilling in the Williston basin, home of the Bakken shale, and the two rigs that were pulled out of Colorado probably had been drilling in the Denver-Julesburg Niobrara chalk, while the 2 rigs removed from Wyoming were probably pulled from one of those "other" shale basins not tracked separately by Baker Hughes...meanwhile, the only changes in natural gas rigs this week were in the Marcellus, where one rig was pulled out of Pennsylvania, while another rig started drilling in West Virginia, leaving both the Marcellus and the national natural gas rig counts unchanged...

DUC well report for April

Monday of this past week saw the release of the EIA's Drilling Productivity Report for May, which includes the EIA's April data for drilled but uncompleted ​oil and gas wells in the 7 most productive shale regions....for the first time in fourteen months, this report showed a increase in uncompleted wells nationally in April, as both the drilling of new wells and completions of drilled wells decreased, but completions decreased by more.....for the 7 sedimentary regions covered by this report, the total count of DUC wells increased by 13 wells, rising from a revised 7,604 DUC wells in March to 7,617 DUC wells in April, which is still 11.8% fewer DUCs than the 8,636 wells that had been drilled but remained uncompleted as of the end of April of a year ago...this month's DUC increase occurred as 718 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during April, down by 272 from the 990 wells that were drilled in March and the lowest number of wells drilled since December 2016, while 705 wells were completed and brought into production by fracking, a decrease of 365 well completions from the 1,070 completions seen in March, and down from the 1,281 completions seen in April of last year, and also the lowest number of completions since December 2016....at the April completion rate, the 7,617 drilled but uncompleted wells left at the end of the month represents a 10.8 month backlog of wells that have been drilled but are not yet fracked, up from the 7.1 month DUC well backlog of a month ago...

oil producing regions saw a net DUC well increase in April, while natural gas producing regions still saw a net DUC well decrease...the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico increased by 28, from 3,436 DUC wells at the end of March to 3,464 DUCs at the end of April, as 333 new wells were drilled into the Permian, while 305 wells in the region were being fracked....at the same time, DUC wells in the Bakken of North Dakota increased by 10, from 888 DUC wells at the end of March to 898 DUCs at the end of April, as 67 wells were drilled into the Bakken in April, while 57 of the drilled wells in that basin were being fracked...in addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range increased by 7 to 460, as 83 Niobrara wells were drilled in April while 76 Niobrara wells were completed...meanwhile, there was an increase of 1 DUC well in the Eagle Ford of south Texas, from 1,356 DUC wells at the end of March to 1,357 DUCs at the end of April, as 99 wells were drilled in the Eagle Ford during April, while 98 already drilled Eagle Ford wells were completed...but on the other hand, DUCs in the Oklahoma Anadarko decreased by 25, falling from 691 at the end of March to 666 DUC wells at the end of April, as 33 wells were drilled into the Anadarko basin during April while 58 Anadarko wells were being fracked....

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 9 wells, from 536 DUCs at the end of March to 527 DUCs at the end of April, as 71 wells were drilled into the Marcellus and Utica shales during the month, while 80 of the already drilled wells in the region were fracked....on the other hand, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 1 to 245, as 32 wells were drilled into the Haynesville during April, while 31 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of April, DUCs in the five major oil-producing basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by a net of 21 wells to 6,845 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 8 wells to 772 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...

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note: there’s more here

Monday, May 18, 2020

global oil surplus at a record 18.2 million barrels per day in April, 22.3% over demand; horizontal drilling at Aug 2006 low

oil prices rose for a third week in a row this past week, after the Saudis announced additional production cuts and the EIA reported the first withdrawal from US crude supplies in sixteen weeks....after rising 25% to $24.74 a barrel as US oil producers curtailed production and states began to loosen restrictions on shopping & travel last week, the contract price of US light sweet crude for June delivery opened lower on Monday and slid to a 60 cent ​loss at $24.14 a barrel, as concern over a persistent oil supply glut and fear of a second wave of coronavirus cases combined to more than offset the bullish impact of supply cuts at some of the world's top producers...oil prices ​then ​turned positive on Tuesday and jumped more than $2 a barrel after Saudi Arabia said it would cut production by an additional 1 million barrels per day after June 1st, and held on to most of those gains to close $1.64 higher at a five week high of $25.78 a barrel, bolstered by the hope that reopening economies would help drain the crude oil glut...but oil prices opened lower again on Wednesday a fell to $24.79 a barrel after an overnight industry report indicated a larger than expected addition to US crude supplies and held on to half ​of ​that loss to close 49 cents lower at $25.29 a barrel, after Fed Chairman Powell warned of an "extended period" of weak economic growth, even ​as EIA data showed an unexpected weekly decline in crude supplies both nationally and at the Cushing Oklahoma storage hub....oil supply reports, including the ​reported ​dip in U.S. crude stockpiles, pushed prices higher on Thursday as they rallied to close $2.27 or 9% higher at $27.56 per barrel after the International Energy Agency forecast lower global stockpiles in the second half of 2020...U.S. crude prices then jumped another 9% on Friday to their highest level since March, as countries around the world eased​ the​ travel restrictions they had imposed to curb the spread of the coronavirus, and closed up $1.87 at $29.43 per barrel, 49 cents off their high for the day...US oil prices thus logged a 19% gain for the week​ and neared a two-month high as China’s industrial output rose for the first time since the coronavirus pandemic began...

natural gas prices, on the other hand, fell for a third straight week as milder weather and virus related ​falling demand continued to take its toll...after falling 3.5% to end​ ​last week at $1.823 per mmBTU on ongoing coronavirus demand destruction and rising supplies, the contract price of natural gas for June delivery opened higher and rose to a 6.7 cent gain on Monday before falling back to close little changed at $1.826 per mmBTU, as forecasts for milder weather and less demand over the next two weeks offset a continued slowdown in output as companies slashed spending on new wells and shut in their old ones...natural gas prices then fell almost 6% to a three-week low of $1.720 per mmBTU on Tuesday as the weather turned milder and businesses remain closed, both ​meaning lower demand...tanking demand for LNG drove​ gas​ prices lower again on Wednesday, ​as they fell 10.4 cents to a four-week low of $1.616 per mmBTU, despite expectations that ​oil ​associated gas output would slow as a collapse in oil prices prompted firms to shut oil wells and slash spending on new drilling...a lower than expected addition to underground natural gas storage then fueled a brief rally on Thursday, as the June gas contract climbed 6.5 cents to settle at $1.681 per mmBTU, but the contract price gave back 3.5 cents of that gain on Friday, as forecasts for milder weather implied larger additions to storage in the weeks going forward...June natural gas thus ended the week priced at $1.646​ ​per mmBTU, 9.7% lower than the previous Friday's close...

the natural gas storage report from the EIA for the week ending May 8th indicated that the quantity of natural gas held in underground storage in the US rose by 103 billion cubic feet to 2,422 billion cubic feet by the end of the week, which left our gas supplies 799 billion cubic feet, or 49.2% higher than the 1,623 billion cubic feet that was in storage on May 8th of last year, and 413 billion cubic feet, or 20.6% above the five-year average of 2,009 billion cubic feet of natural gas that has been in storage as of the 8th of May in recent years....the 103 billion cubic feet that were added to US natural gas storage this week was lower than the consensus forecast for a 110 billion cubic feet increase from a survey of analysts by S&P Global Platts, but was well above the 75 billion cubic feet of natural gas that have been added to natural gas storage during the same week over the past 5 years, and also above the 100 billion cubic feet addition of natural gas to storage during the corresponding week of 2019... 

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending May 8th indicated that because of a large jump in the amount of oil that went missing after it was either imported or reportedly produced, our commercial supplies of stored crude oil fell for the first time in 16 weeks and for the ninth time in the past thirty-five weeks...our imports of crude oil fell by an average of 321,000 barrels per day to an average of 5,391,000 barrels per day, after rising by an average of 410,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 21,000 barrels per day to an average of 3,525,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 1,866,000 barrels of per day during the week ending May 8th, 300,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells fell by 300,000 barrels per day to 11,600,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 13,466,000 barrels per day during this reporting week..

meanwhile, US oil refineries reported they were processing 12,383,000 barrels of crude per day during the week ending May 8th, 594,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that 170,000 barrels of oil per day were being added to the supplies of oil stored in the US....so based on that data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 914,000 barrels per day more than what what was added to storage plus what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (-914,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed...however, since the media treats these figures as gospel and since the​se numbers often drive oil pricing and hence decisions to drill for oil, we'll continue to report them, just as they're watched & believed as accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....   

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 5,336,000 barrels per day last week, now 26.1% less than the 7,217,000 barrel per day average that we were importing over the same four-week period last year....the 170,000 barrel per day addition to our total crude inventories included 276,000 barrels per day that were added to our Strategic Petroleum Reserve, which was partly offset by 106,000 barrels per day that were being withdrawn from our commercially available stocks of crude oil....this week's crude oil production was reported to be down by 300,000 barrels per day to 11,600,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was down by 300,000 barrels per day to 11,200,000 barrels per day, while a 5,000 barrel per day decrease in Alaska's oil production to 438,000 barrels per day had no impact on the rounded national total....last year's US crude oil production for the week ending May 10th was rounded to 12,100,000 barrels per day, so this reporting week's rounded oil production figure was 4.1% below that of a year ago, yet still 37.6% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 67.9% of their capacity in using 12,383,000 barrels of crude per day during the week ending May 8th, down from 70.5% of capacity during the prior week, and among the lowest refinery utilization rates of the last dozen years...hence, the 12,383,000 barrels per day of oil that were refined this week were 25.7% fewer barrels than the 16,676,000 barrels of crude that were being processed daily during the week ending May 10th, 2019, when US refineries were operating at a seasonally typical 90.5% of capacity....

even with the decrease in the amount of oil being refined, gasoline output from our refineries was quite a bit higher, increasing by 792,000 barrels per day to 7,497,000 barrels per day during the week ending May 8th, after our refineries' gasoline output had decreased by 30,000 barrels per day over the prior week....but since the recent  gasoline output increases have been coming off a 22 year low in gasoline production, our gasoline output this week was still 24.4% lower than the 9,912,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 190,000 barrels per day to 4,892,000 barrels per day, after our distillates output had increased by 100,000 barrels per day over the prior week...after this week's decrease in distillates output, our distillates' production for the week was 7.1% less than the 5,264,000 barrels of distillates per day that were being produced during the week ending May 10th, 2019....

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the 3rd time in 6 weeks and for the 11th time in 15 weeks, falling by 3,513,000 barrels to 252,894,000 barrels during the week ending May 8th, after our gasoline supplies had decreased by 3,158,000 barrels over the prior week...our gasoline supplies decreased again this week because the amount of gasoline supplied to US markets increased by 734,000 barrels per day to 7,398,000 barrels per day, even as our exports of gasoline fell by 358,000 barrels per day to a 100 month low of 174,000 barrels per day while our imports of gasoline rose by 118,000 barrels per day to 486,000 barrels per day....and even after this week's inventory decrease, our gasoline supplies were still 12.4% higher than last May 10th's gasoline inventories of 225,024,000 barrels, and roughly 9% above the five year average of our gasoline supplies for this time of the year...  

with the increase in our distillates production, our supplies of distillate fuels increased for the sixth time in 17 weeks and for the 11th time in 32 weeks, rising by 3,511,000 barrels to 155,001,000 barrels during the week ending May 8th, after our distillates supplies had increased by 9,515,000 barrels over the prior week....our distillates supplies rose by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, jumped by 689,000 barrels per day to 3,818,000 barrels per day, while our exports of distillates fell by 163,000 barrels per day to 766,000 barrels per day and our imports of distillates fell by 143,000 barrels per day to 193,000 barrels per day....after this week's inventory increase, our distillate supplies at the end of the week were 23.4% above the 125,647,000 barrels of distillates that we had stored on May 10th, 2019, and about 16% above the five year average of distillates stocks for this time of the year...

finally, with lower oil imports and ​the drop in our crude production, our commercial supplies of crude oil in storage fell for the first time in sixteen weeks and for the nineteenth time in the past 52 weeks, decreasing by 745,000 barrels, from 532,221,000 barrels on May 1st to 531,476,000 barrels on May 8th...but ​since that was ​after 15 straight increases and three record increases over past ​6 weeks, our crude oil inventories are still 11% above the five-year average of crude oil supplies for this time of year, and almost 49% above the prior 5 year (2010 - 2014) average of crude oil stocks as of the 8th of May, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels, and continued rising from there....since our crude oil inventories have generally been rising over the past year and a half, except for during this past summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of May 8th were 12.6% above the 472,035,000 barrels of oil we had in commercial storage on May 10th of 2019, 22.9% above the 432,354,000 barrels of oil that we had in storage on May 11th of 2018, and 2.1% above the 520,772,000 barrels of oil we had in commercial storage on May 12th of 2017... 

OPEC's Monthly Oil Market Report

Wednesday of this past week saw the release of OPEC's May Oil Market Report, which covers OPEC & global oil data for April, and hence it gives us a picture of the global oil supply & demand situation during the period when the Saudis and their allies were engaged in an oil price war against the Russians and US shale, but before before the mid-April agreement to cut production by 9.7 million barrels a day during May & June kicked in....​but ​before we start, we should caution that estimating oil demand while most countries on the planet are engaged in varying degrees of lockdown is pretty much a crapshoot, and hence the numbers we'll be reporting this month should be considered ​as ​having a much larger margin of error than we'd normally expect from this report..

the first table from this monthly report that we'll ​review is from the page numbered 46 of that report (pdf page 56), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thus avert any potential disputes that could arise if each member reported their own figures... 

April 2020 OPEC crude output via secondary sources

as we can see from the above table of oil production data, OPEC's oil output jumped by 1,798,000 barrels per day to 30,412,000 barrels per day in April, from their revised March production total of 28,614,000 barrels per day...however that March output figure was originally reported as 28,612,000 barrels per day, which means that OPEC's March production was revised 2,000 barrels per day higher with this report, and hence April's production was, in effect, a 1,800,000 barrel per day increase from the previously reported OPEC production figures (for your reference, here is the table of the official March OPEC output figures as reported a month ago, before this month's revisions)...

from the above table, we can also see that increases of 1,553,000 barrels per day from the Saudis, 332,000 barrels per day from the Emirates, and 259,000 barrels per day from Kuwait were the reason for the output increase in April, as every other major OPEC producer continued to adhere to the output allocations that were originally determined for each OPEC member after their December 7th, 2018 meeting, when OPEC agreed to cut 800,000 barrels per day as part of a 1.2 million barrel per day cut agreed to with Russia and other oil producers and the additional production cuts of 500,000 barrels per day through to March 2020 that were announced at their December 6th, 2019 meeting..

the next graphic from the report that we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from May 2018 to April 2020, and it comes from page 47 (pdf page 57) of the May OPEC Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale... 

April 2020 OPEC report global oil supply

even with the 1,798,000 barrel per day jump in OPEC's production from what they produced a month ago, OPEC's preliminary estimate indicates that total global oil production decreased by a rounded 0.18 million barrels per day to average 99.46 million barrels per day in April, a reported decrease which apparently came after April 's total global output figure was revised lower by 220,000 barrels per day from the 99.86 million barrels per day of global oil output that was reported a month ago, as non-OPEC oil production fell by a rounded 1,980,000 barrels per day in April after that revision, with lower oil production from the US, Canada, Ecuador, Brazil and Kazakhstan the major reasons for the non-OPEC output decrease in April...​even ​with the decrease in April's global output, the 99.46 million barrels of oil per day produced globally in April were ​still ​1.24 million barrels per day, or 1.3% greater than the revised 98.22 million barrels of oil per day that were being produced globally in April a year ago, the 4th month of OPECs first round of production cuts (see the May 2019 OPEC report (online pdf) for the originally reported April 2019 details)...with this month's big increase in OPEC's output, their April oil production of 30,412,000 barrels per day rose to 30.6% of what was produced globally during the month, up from the 28.7% share OPEC contributed in March, and the 28.1% global share they had in February...OPEC's April 2019 production, which included 528,000 barrels per day from former member Ecuador, was reported at 30,031,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 909,000 more barrels per day of oil in April than what they produced a year ago, when they accounted for 30.4% of global output, with a 1,740,000 barrel per day increase in output from Saudi Arabia, a 779,000 barrel per day increase in the output from the Emirates, and a 435,000 barrel per day increase in the output from Kuwait from that time more than offsetting a 1,094,000 barrel per day drop in the output from Libya and a 585,000 barrel per day drop in the output from Iran​,​ to ​thus ​result in the year over year increase...

with the big jump in OPEC's output that we've seen in this report, there was a record surplus in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...    

April 2020 OPEC report global oil demand

the above table came from page 25 of the May OPEC Monthly Oil Market Report (pdf page 35), and it shows regional and total oil demand estimates in millions of barrels per day for 2019 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2020 over the rest of the table...on the "Total world" line in the third column, we've circled in blue the figure that's relevant for April, which is their estimate of global oil demand during the second quarter of 2020...

OPEC is estimating that during the 2nd quarter of this year, all oil consuming regions of the globe will be using an average of 81.30 million barrels of oil per day, which is a 5.40 million barrel per day downward revision from the 86.70 million barrels of oil per day they were estimating for the 2nd quarter a month ago (circled in green), largely reflecting coronavirus related demand destruction....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were ​still ​producing 99.46 million barrels per day during April, which would imply that there was a surplus of around 18,160,000 barrels per day in global oil production in April​, 22.3% greater than​ the demand estimated for the month... 

in addition to the April surplus, the downward revision of 180,000 barrels per day to March's global output that's implied in this report, combined with the 530,000 barrels per day downward revision to 1st quarter demand that we've circled in green means that the 17,718,000 barrels per day global oil output surplus we had figured for March would now be revised to a surplus of 18,068,000 barrels per day....the 530,000 barrels per day downward revision to 1st quarter demand means we'd also have to revise our February surplus oil production estimate from 1,660,000 barrels per day to 2,190,000 barrels per day, and revise our January surplus oil production estimate from 690,000 barrels per day to 1,220,000 barrels per day...

as you'll recall, OPEC, the Russians, and other oil producers have recently agreed to cut their production by 9.7 million barrels a day during May & June, in an agreement which would produce the specific reduction​ in output​ shown in the table below...a month ago, we looked at those cuts on a country by country basis, and found that because ​OPEC is using October 2018 as a basis for their cuts, the actual reduction from February's already depressed production level was just 5.8%, not the 23% cuts advertised...we then went out on a limb and estimated that 2nd quarter global production would still be 6,160,000 barrels per day greater than demand even after these much ballyhooed production cuts...without any recomputation of the figures that went into that estimate, the 5.40 million barrel per day downward revision to 2nd quarter demand ​shown above ​would now mean that our revised estimate for the second quarter's global oil surplus would be at 11,560,000 barrels per day...

April 13th 2020 OPEC   emergency cuts

Note: the above table was taken from an article at Zero Hedge, and it shows the oil production baseline in thousands of barrel per day off of which each of the oil producers will cut from in the first column, a number which is based on each of the producer's October 2018 output, ie., a date before the past year's and past quarter's output cuts took effect; the second column shows how much each participant will cut in thousands of barrel per day, which is 23% of the October 2018 baseline for all participants except for Mexico, while the last column shows the production level each participant has agreed to after that 23% cut...

This Week's Rig Count

the US rig count fell for the 10th week in a row during the week ending May 15th, and is now down by 57.3% over that ten week period....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 35 rigs to 339 rigs this past week, which was the fewest rigs deployed in Baker Hughes records going back to 1940, down by 648 rigs from the 987 rigs that were in use as of the May 17th report of 2019, and 1,590 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business....

the number of rigs drilling for oil decreased by 34 rigs to 258 oil rigs this week, after falling by 33 oil rigs the prior week, leaving oil rig activity at its lowest since July 17, 2009, which was also 544 fewer oil rigs than were running a year ago, and less than a sixth of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 1 to 79 natural gas rigs, the fewest natural gas rigs active in 80 years of Baker Hughes records, down by 106 natural gas rigs from the 185 natural gas rigs that were drilling a year ago, and less than a twentieth of modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Lake County, California... a year ago, there were no such "miscellaneous" rigs deployed..

the Gulf of Mexico rig count was down by three rig to 12 rigs this week, the least Gulf rig activity since September 2nd 2016, with all of those Gulf rigs drilling for oil in Louisiana's offshore waters...that's ten fewer rigs than the rig count in the Gulf a year ago, when 20 rigs were drilling offshore from Louisiana and two rigs were operating in Texas waters...there are no rigs operating offshore elsewhere at this time, nor were there a year ago, so the Gulf rig count is equivalent to the national rig count, just as it has been since the onset of ​this past ​winter...

the count of active horizontal drilling rigs decreased by 31 rigs to 307 horizontal rigs this week, which was the fewest horizontal rigs active since August 18, 2006, and hence is 3 months short of a 14 year low for horizontal drilling...it was also 559 fewer horizontal rigs than the 866 horizontal rigs that were in use in the US on May 17th of last year, and less than a quarter of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count decreased by 5 to leave 22 directional rigs running this week, and those were down by 51 from the 73 directional rigs​ ​that were operating during the same week of last year....on the other hand, the vertical rig count was up by 1 to 10 vertical rigs this week, but those were still down by 38 from the 48 vertical rigs that were in use on May 17th of 2019....

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the 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 May 15th, the second column shows the change in the number of working rigs between last week's count (May 8th) and this week's (May 15th) count, the third column shows last week's May 8th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of 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 the 17th of May, 2019...    

May 15 2020 rig count summary

as you can see, this weeks basin totals show a decrease of 31 rigs, equal to the number of horizontal rigs removed nationally this week, which strongly suggests that all of this week's horizontal drilling changes took place in the major shale basins...checking the rig losses in the Texas part of Permian basin, we find that 15 rigs were pulled out of Texas Oil District 8, or the core Permian Delaware, and 3 more rigs were removed from Texas Oil District 7C, or the southern Permian Midland, and another rig was removed from Texas Oil District 8A, or the northern Permian Midland, and hence the Permian in Texas saw a total reduction of 19 rigs...since the overall Permian rig total was down by 23 rigs, that means that the 4 rigs that were pulled out in New Mexico must have been drilling in the western Permian Delaware, ​to ​account for the national Permian reduction of 23 rigs...elsewhere in Texas, two rigs were pulled out of Texas Oil District 1, one rig was pulled from Texas Oil District 2, and one rig was pulled out of Texas Oil District 3, any three of which could account for the 3 rig reduction in Eagle Ford shale, which stretches in a relatively narrow band through the southeastern part of the state and thus touches on 4 Oil Districts...in other states, the three rigs that were pulled out of Louisiana were th​ose that had been drilling in the Gulf of Mexico, the four rigs that were pulled out of North Dakota had all been drilling in the Williston basin, home of the Bakken shale, and the rig removed from the Ardmore Woodford accounts for the rig pulled out of Oklahoma...Oklahoma had another change, though, because an oil rig that was pulled out of the Granite Wash basin was offset by a natural gas rig that started up in that basin during the same period​....natural gas rigs were still down by one nationally, however, because 2 natural gas rigs were concurrently removed from ​"​other" basins not tracked separately by Baker Hughes in this report..

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Monday, May 11, 2020

US crude supplies highest ever for May; oil + products supplies are highest ever; rig count is lowest on record

oil prices rose for a second week as US oil producers curtailed production and states began to loosen restrictions on travel that had been imposed in the wake of the coronavirus pandemic...after rising 17% to $19.78 a barrel last week as OPEC's production cuts kicked in and fears of negative oil prices faded, the contract price of US light sweet crude for June delivery reversed early steep losses and moved higher on Monday as optimism for a demand recovery offset concern over a spat that broke out between the United States and China over the origin of the virus and finished trading 61 cents higher at $20.39 a barrel...prices continued climbing early Tuesday as prospects for rising demand increased as lockdowns began to ease and then surged in late trading as optimism around ongoing production cuts and the reopening of economies around the world pushed prices higher and finished with an increase of $4.17, or more than 20%, at $24.56 barrel, and then extended those gains in after-hours trading despite industry data showing a larger-than-forecast weekly build in U.S. crude inventories, as the report also showed a surpris​ingly​ large ​drop in gasoline supplies...oil prices opened higher but edged down early Wednesday on that increase in US crude inventories, but rebounded after the EIA's data showed both production cuts and a smaller crude build and then rose to as high as $26.08 a barrel before turning lower in profit taking to finish at $23.99 a barrel, a loss of 57 cents on the day...oil prices again opened higher and rose to as high as $26.76 on Thursday​,​ but ​again ​turned negative in afternoon trading as optimism that had previously supported prices began to fade, and US crude ended the session down 44 cents at $23.55 a barrel after downbeat comments from Federal Reserve officials and ​on ​doubts over producer compliance with the OPEC+ output-cut agreement....after opening lower on Friday, oil prices turned higher after U.S. producers shut-in more crude production and more states announced plans to relax the lockdowns that had destroyed demand, with the benchmark US crude closing $1.19 or 5% higher at $24.74 a barrel...oil prices thus finished the week 25% above those of the prior Friday, largely on optimism over production cuts and rising demand that had yet to materialize...

natural gas prices, on the other hand, finished lower for a second week on ongoing coronavirus demand destruction and rising supplies...after ending last week down less than 1% at $1.890 per mmBTU as concerns over falling demand outweighed prospects for lower supplies, the contract price of natural gas for June delivery opened 4% higher and rose to a gain of 10.3 cents on Monday, as a sustained drop in production and forecasts for another shot of winter-like temperatures fueled the increase...prices then jumped 14.1 cents to a 16 week high of $2.134 per mmBTU​ ​on Tuesday after a gas pipeline explosion in Kentucky shut down a section of the Texas Eastern pipeline, cutting off over 1 billion cubic feet per day of gas flows from the Marcellus Shale to the Gulf Coast...but natural gas prices reversed that gain when they tumbled 19 cents on Wednesday on forecasts for lower than expected demand next week and longer-term projections that businesses would use less of the fuel and that exports would drop in coming months on coronavirus related curtailments...a triple digit injection of natural gas into storage hit prices Thursday, and they fell back another 5 cents to $1.894 per mmBTU...gas prices then fell another 4% on Friday on forecasts for lower demand in mid-May due to milder weather while commercial demand was expected to remain low and ended the week at $1.823 per mmBTU, down 3.5% on the week even as three Enbridge pipeline segments remained shut down after the Tuesday explosion...

the natural gas storage report from the EIA for the week ending May 1st indicated that the quantity of natural gas held in underground storage in the US rose by 109 billion cubic feet to 2,319 billion cubic feet by the end of the week, which left our gas supplies 796 billion cubic feet, or 52.3% higher than the 1,523 billion cubic feet that was in storage on May 1st of last year, and 395 billion cubic feet, or 20.5% above the five-year average of 1,924 billion cubic feet of natural gas that has been in storage as of the 1st of May in recent years....the 109 billion cubic feet that were added to US natural gas storage this week was a bit higher than the consensus forecast for a 105 billion cubic feet increase from a survey of analysts by S&P Global Platts, and quite a bit above the 74 billion cubic feet of natural gas that have been added to natural gas storage during the same week over the past 5 years, and also above the 96 billion cubic feet addition of natural gas to storage during the corresponding week of 2019...

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending May 1st indicated that a large increase in our oil imports offset the increases in our exports and our oil refining to again leave a ​substantial ​surplus of oil to be added to our stored commercial supplies, the fifteenth consecutive increase and the twenty-sixth addition of oil to storage in the past thirty-four weeks...our imports of crude oil rose by an average of 410,000 barrels per day to an average of 5,712,000 barrels per day, after rising by an average of 365,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 244,000 barrels per day to an average of 3,546,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,166,000 barrels of per day during the week ending May 1st, 166,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells fell by 200,000 barrels per day to 11.900,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 14,066,000 barrels per day during this reporting week..

meanwhile, US oil refineries reported they were processing 12,976,000 barrels of crude per day during the week ending May 1st, 216,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that 901,000 barrels of oil per day were being added to the supplies of oil stored in the US....so ​from all that data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 189,000 barrels per day more than what what was added to storage plus what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (-189,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....   

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 5,408,000 barrels per day last week, now 20.6% less than the 6,812,000 barrel per day average that we were importing over the same four-week period last year....the 901,000 barrel per day addition to our total crude inventories included 656,000 barrels per day that w​ere added to our commercially available stocks of crude oil, and 245,000 barrels per day that w​ere added to our Strategic Petroleum Reserve....this week's crude oil production was reported to be down by 200,000 barrels per day to 11,900,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was down by 100,000 barrels per day to 11,500,000 barrels per day, while a 23,000 barrel per day decrease in Alaska's oil production to 443,000 barrels per day was enough to cause the subtraction of another 100,000 barrels per day from the rounded national total....last year's US crude oil production for the week ending May 3rd was rounded to 12,200,000 barrels per day, so this reporting week's rounded oil production figure was 2.5% below that of a year ago, yet still 41.2% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 70.5% of their capacity in using 12,976,000 barrels of crude per day during the week ending May 1st, up from 69.6% of capacity during the prior week, but still among the lowest refinery utilization rates of the last dozen years...hence, the 12,976,000 barrels per day of oil that were refined this week still 20.9% fewer barrels than the 16,405,000 barrels of crude that were being processed daily during the week ending May 3rd, 2019, when US refineries were operating at a seasonally weak 88.9% of capacity....

even with the increase in the amount of oil being refined, gasoline output from our refineries was a bit lower, decreasing by 30,000 barrels per day to 6,705,000 barrels per day during the week ending May 1st, after our refineries' gasoline output had increased by 530,000 barrels per day over the prior week....but since the recent increases have been coming off a 22 year low in gasoline output, our gasoline production this week was still 33.8% lower than the 10,129,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 100,000 barrels per day to 5,082,000 barrels per day, after our distillates output had decreased by 25,000 barrels per day over the prior week...and after this week's increase in distillates output, our distillates' production for the week was just a fraction less than the 5,089,000 barrels of distillates per day that were being produced during the week ending May 3rd, 2019....

with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week ​decreased for ​the 2nd time in 5 weeks and for the 10th time in 14 weeks, falling by 3,158,000 barrels to 256,407,000 barrels during the week ending May 1st, after our gasoline supplies had decreased by 3,669,000 barrels over the prior week...our gasoline supplies decreased again this week because the amount of gasoline supplied to US markets increased by 804,000 barrels per day to  6,664,000 barrels per day, even as our exports of gasoline fell by 373,000 barrels per day to 532,000 barrels per day while our imports of gasoline rose by 140,000 barrels per day to 368,000 barrels per day....and even after this week's inventory decrease, our gasoline supplies were still 14.5% higher than last May 3rd's gasoline inventories of 226,743,000 barrels, and roughly 9% above the five year average of our gasoline supplies for this time of the year...

with the increase in our distillates production, our supplies of distillate fuels increased for the fifth time in 16 weeks and for the 10th time in 31 weeks, and by the most since January 4th, 2019, rising by 9,518,000 barrels to 151,490,000 barrels during the week ending May 1st, after our distillates supplies had increased by 5,092,000 barrels over the prior week....our distillates supplies rose by more this week because our exports of distillates fell by 397,000 barrels per day to 929,000 barrels per day while our imports of distillates rose by 101,000 barrels per day to 336,000 barrels per day, while the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 35,000 barrels per day to 3,129,000 barrels per day....after this week's big inventory increase, our distillate supplies at the end of the week were 20.6% above the 125,563,000 barrels of distillates that we had stored on May 3rd, 2019, and about 12% above the five year average of distillates stocks for this time of the year...

finally, with higher oil exports and a modest increase in oil refining being mostly offset by higher oil imports, our commercial supplies of crude oil in storage rose for the twenty-seventh time in forty-four weeks and for the thirty-fourth time in the past 52 weeks, increasing by 4,590,000 barrels, from 527,631,000 barrels on April 24th to 532,221,000 barrels on May 1st...after 15 straight increases and three record increases over past 5 weeks, our crude oil inventories are now 12% above the five-year average of crude oil supplies for this time of year, and 49.2% higher than the prior 5 year (2010 - 2014) average of crude oil stocks as of the first of May, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels, and continued rising from there....since our crude oil inventories have generally been rising over the past year and a half, except for during this past summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of May 1st were 14.1% above the 466,604,000 barrels of oil we had in commercial storage on May 3rd of 2019, and 22.7% above the 435,955,000 barrels of oil that we had in storage on May 4th of 2018, 1.9% above the 522,525,000 barrels of oil we had in commercial storage on May 5th of 2017... and if we take the total of our commercial oil supplies and the stores of all the refined product made from oil, we find those supplies are now at a record high of 1,395,429,000 barrels, 11.6% more than the 1,249,867,000 barrel total of a year ago...

This Week's Rig Count

the US rig count fell for the 9th week in a row during the week ending May 8th, and is now down by 52.8% over that nine week period....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 34 rigs to 374 rigs this past week, which was the fewest rigs deployed in Baker Hughes records going back to 1940, down by 614 rigs from the 988 rigs that were in use as of the May 10th report of 2019, and 1,555 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business....

the number of rigs drilling for oil decreased by 33 rigs to 292 oil rigs this week, after falling by 57 oil rigs the prior week, leaving oil rig activity at its lowest since September 11, 2009, which was also 513 fewer oil rigs than were running a year ago, and less than a fifth of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 1 to 80 natural gas rigs, the fewest natural gas rigs active in ​80 years of ​Baker Hughes records, down by 103 natural gas rigs from the 183 natural gas rigs that were drilling a year ago, and just a twentieth of modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Lake County, California... a year ago, there were no such "miscellaneous" rigs deployed..

the Gulf of Mexico rig count was down by one rig to 15 rigs this week, with all of those Gulf rigs drilling for oil in Louisiana's offshore waters...that's five less than the rig count in the Gulf a year ago, when 17 rigs were drilling offshore from Louisiana and three rigs were operating in Texas waters...there are no rigs operating offshore elsewhere at this time, nor were there a year ago, so the Gulf rig count is equivalent to the national rig count, just as it has been since the onset of winter...

the count of active horizontal drilling rigs decreased by 36 rigs to 338 horizontal rigs this week, which was the fewest horizontal rigs active since July 1st, 2016, and hence is a 46 month low for horizontal drilling...it was also 534 fewer horizontal rigs than the 872 horizontal rigs that were in use in the US on May 10th of last year, and down by more than a thousand from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count was down by 2 to 9 vertical rigs this week, and those were down by 36 from the 45 vertical rigs that were operating during the same week of last year....on the other hand, the directional rig count increased by 4 to ​​leave 27 directional rigs running this week, but those were still down by 44 from the 71 directional rigs that were in use on May 10th of 2019....

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the 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 May 8th, the second column shows the change in the number of working rigs between last week's count (May 1st) and this week's (May 8th) count, the third column shows last week's May 1st active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of 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 the 10th of May, 2019...    

May 8 2020 rig count summary

this weeks basin totals show a decrease of 32 rigs, once again short of the 36 horizontal rigs removed nationally this week, thus indicating that 4 horizontal rigs were also shut down in basins not tracked separately by Baker Hughes and hence not shown above...at first glance, it appears they might have been in Texas, since the other state's totals balance with the listed basin counts...so first checking the rig losses in the Texas part of Permian basin, we find that 23 rigs were pulled out of Texas Oil District 8, or the core Permian Delaware, and 2 more rigs were removed from Texas Oil District 7C, or the southern Permian Midland, and hence the Permian in Texas saw a total reduction of 25 rigs...since the overall Permian rig total was only down by 21 rigs, that means that the 4 rigs that were added in New Mexico must have been set up to drill in the western Permian Delaware, to bring the national Permian reduction ​back down ​to 21 rigs...elsewhere in Texas, 1 rig was pulled out of Texas Oil District 1, 1 rig was pulled from Texas Oil District 2, and 1 rig was pulled out of Texas Oil District 4, which together would account for the 3 rig reduction in Eagle Ford shale, which stretches in a relatively narrow band through the southeastern part of the state and thus touches on 4 ​Oil ​Districts...meanwhile, the 6 rigs that were pulled out of North Dakota had all been drilling in the Williston basin, home of the Bakken shale, and the rig removed from the Ardmore Woodford accounts for one of the two rigs pulled out of Oklahoma....elsewhere, the only rig pulled out of Louisiana was the oil rig that had been drilling in the Gulf, while the Utica shale rig pulled out of Ohio was the only natural gas rig change anywhere nationally this week...

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Monday, May 4, 2020

US rig count at a 47 month low after largest percentage rig drop on record

oil prices finished higher for the first time in four weeks on somewhat less trading volume than in the prior week, as the outlook for production cuts outweighed fears that there'd soon be no place to store any new oil...after falling by a record 32% to $16.94 a barrel in a week that saw the price of May oil fall to $40 below zero, the contract price of the US benchmark crude for June delivery initially fell 7% early Monday on signs that worldwide oil storage was filling rapidly, raising concerns that production cuts would be unable to catch up with the collapse in demand and then collapsed to as low as $11.88 a barrel as it became apparent that oil ETFs (exchange traded funds), fearing negative prices, were dumping June oil in favor of later dates, and then only partly recovered to close down $4.16 or 25% at $12.78 a barrel even as governments worldwide began taking tentative steps towards reducing restrictions that had driven fuel demand down 30%....oil prices then extended Monday's near 25% decline by sliding more than 15% during overnight trading on ongoing fears that storage around the world was rapidly filling, and traded as low as $10.07 on Tuesday after the Chicago Mercantile Exchange ordered the United States Oil Fund to sell some of its near-dated futures contracts and after reports that OPEC's oil production had risen more than 2 million barrels per day, but recovered in late trading to finish down just 44 cents at $12.34 a barrel even as storage fears persisted...however, oil prices rebounded more than 20% on Wednesday after EIA data showed a smaller-than-expected build in U.S. oil inventories, and on hopes that economies will reopen sooner than expected, with June oil rising 22%, or $2.72, to settle at $15.06 per barrel, after trading as high as $16.78...oil prices then rallied 25% on Thursday to finish April down just 8%, with the US benchmark crude rising $3.78 to $18.84 a barrel on news that major oil companies and countries outside of OPEC had announced voluntary crude production cuts...oil prices added another 5% to those gains on Friday, closing up 94 cents at $19.78 a barrel, after U.S. drillers cut oil rigs for a seventh week in a row, lowering the total count down to 325, the lowest since June 2016...oil prices thus finished the week 17% higher as traders marked the start date for production cuts under the new agreement between OPEC & other oil producers...

natural gas prices, on the other hand, finished slightly lower as concerns over falling demand outweighed prospects for lower supplies....recall that the last time we checked natural gas prices, the contract for natural gas for delivery in May was trading, and it had risen 6.9% to $1.733 per mmBTU during the week ending April 10th on forecasts for cooler weather and a resumption of Chinese LNG imports...since that time, the contract price of natural gas for June delivery has become the quoted "natural gas price", and cooler weather forecasts have become bearish, since they would now indicate less than normal air conditioning demand....the June natural gas contract had finished the week ending April 10 at $1.863 per mmBTU and had gradually moved up to $1.895 by last Friday, with very little of the volatility seen in oil prices over the same period...that natural gas contract opened this week slightly higher but fell to $1.765 per mmBTU on Monday before rising to close 2.1 cents higher, as the two week forecasts for warmer weather were peppered with weak cool shots moving in from the northwest... the June contract price then rose 3.2 cents to $1.948 per mmBTU on Tuesday on expectations that demand would jump once governments loosened travel and work restrictions, even as the May gas contract expired 2.5 cents lower at $1.794 per mmBTU on lower current demand...bearish cooler weather forecasts returned on Wednesday and natural gas prices fell 7.9 cents to $1.869 per mmBTU with demand destruction weighing more heavily on the front month than declines in production...but natural gas prices reversed those losses and rose 8 cents to a 10 week high of $1.949 per mmBTU on Thursday, on reports that drillers were shutting oil wells, which would concurrently reduce associated natural gas output...but gas prices fell back 5.9 cents on Friday on forecasts that demand and exports would decrease due to government lockdowns and ended the week at $1.890 per mmBTU, just a half cent lower than the prior week's close...

the natural gas storage report from the EIA for the week ending April 24th indicated that the quantity of natural gas held in underground storage in the US rose by 70 billion cubic feet to 2,210 billion cubic feet by the end of the week, which left our gas supplies 783 billion cubic feet, or 54.9% higher than the 1,427 billion cubic feet that was in storage on April 24th of last year, and 360 billion cubic feet, or 19.5% above the five-year average of 1,850 billion cubic feet of natural gas that has been in storage as of the 24th of April in recent years....the 70 billion cubic feet that were added to US natural gas storage this week was in line with consensus forecast for a 69 billion cubic feet increase from a survey of analysts by Reuters, but it was a bit below the 74 billion cubic feet of natural gas that have been added to natural gas storage during the same week over the past 5 years, and well below the 114 billion cubic feet addition of natural gas to storage during the corresponding week of 2019..

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 24th indicated that a modest increase in our oil refining combined with import and export increases of the same magnitude still left a large surplus of oil being added to our stored commercial supplies, the twenty-fifth addition of oil to storage in the past thirty-three weeks, but not at the record setting pace of the past three weeks...our imports of crude oil rose by an average of 365,000 barrels per day to an average of 5,302,000 barrels per day, after falling by an average of 743,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 412,000 barrels per day to an average of 3,302,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,000,000 barrels of per day during the week ending April 17th, 47,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells fell by 100,000 barrels per day to 12,100,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 14,100,000 barrels per day during this reporting week..

meanwhile, US oil refineries reported they were processing 12,761,000 barrels of crude per day during the week ending April 24th, 305,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that 1,449,000 barrels of oil per day were being added to the supplies of oil stored in the US....so looking at ​all ​that data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 164,000 barrels per day less than what what was added to storage plus what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (+164,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....   

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 5,448,000 barrels per day last week, now 19.7% less than the 6,789,000 barrel per day average that we were importing over the same four-week period last year....the 1,449,000 barrel per day addition to our total crude inventories included 1,284,000 barrels per day that was added to our commercially available stocks of crude oil, and 164,000 barrels per day that was added to our Strategic Petroleum Reserve....this week's crude oil production was reported to be down by 100,000 barrels per day to 12,100,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was down by 100,000 barrels per day to 11,600,000 barrels per day, while a 1,000 barrel per day decrease in Alaska's oil production to 466,000 barrels per day did not impact the rounded national total....last year's US crude oil production for the week ending April 26th was rounded to 12,300,000 barrels per day, so this reporting week's rounded oil production figure was 1.6% below that of a year ago, yet still 43.6% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 69.6% of their capacity in using 12,761,000 barrels of crude per day during the week ending April 24th, up from 67.6% of capacity during the prior week, but still among the lowest utilization rates of the last dozen years...hence, the 12,761,000 barrels per day of oil that were refined this week still 22.4% fewer barrels than the 16,446,000 barrels of crude that were being processed daily during the week ending April 26th, 2019, when US refineries were operating at 89.2% of capacity....

with the increase in the amount of oil being refined, gasoline output from our refineries was quite a bit higher, increasing by 530,000 barrels per day to 6,735,000 barrels per day during the week ending April 24th, after our refineries' gasoline output had increased by 290,000 barrels per day over the prior week....but since the increases of the past three weeks followed two near record drops in gasoline output, our gasoline production this week was still 32.2% lower than the 9,927,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 25,000 barrels per day to 5,982,000 barrels per day, after our distillates output had increased by 80,000 barrels per day over the prior week...and  after this week's increase in distillates output, our distillates' production for the week was 2.8% less than the 5,128,000 barrels of distillates per day that were being produced during the week ending April 26th, 2019....

with the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell for the fir​s​t time in 5 weeks but for the 9th time in 13 weeks, falling by 3,669,000 barrels to 259,565,000 barrels during the week ending April 24th, after our gasoline supplies had increased by 1,017,000 barrels over the prior week...our gasoline supplies decreased this week because the amount of gasoline supplied to US markets increased by 549,000 barrels per day to 5,860,000 barrels per day, and because our exports of gasoline rose by 121,000 barrels per day to 905,000 barrels per day while our imports of gasoline fell by 140,000 barrels per day to 228,000 barrels per day....even after this week's inventory decrease, our gasoline supplies were ​still ​14.5% higher than last April 26th's gasoline inventories of 226,743,000 barrels, and roughly 10% above the five year average of our gasoline supplies for this time of the year...

with the small decrease in our distillates production, our supplies of distillate fuels increased for the fourth time in 15 weeks and for the 9th time in 30 weeks, rising by 5,092,000 barrels to 141,972,000 barrels during the week ending April 24th, after our distillates supplies had increased by 6,280,000 barrels over the prior week....our distillates supplies rose by less this week because our exports of distillates rose by 466,000 barrels per day to 1,326,000 barrels per day while our imports of distillates rose by 129,000 barrels per day to 235,000 barrels per day, and while the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 36,000 barrels per day to 3,164,000 barrels per day....after this week's big inventory increase, our distillate supplies at the end of the week were 12.9% above the 125,722,000 barrels of distillates that we had stored on April 26th, 2019, and about 4% above the five year average of distillates stocks for this time of the year...

finally, with higher oil exports ​being mostly ​offset by higher oil imports against a modest increase in oil refining, our commercial supplies of crude oil in storage rose for the twenty-sixth time in forty-three weeks and for the thirty-third time in the past 52 weeks, increasing by 8,991,000 barrels, from 518,640,000 barrels on April 17th to 527,631,000 barrels on April 24th....but even after 14 straight increases and three record increases over the prior 3 weeks, our crude oil inventories were only 10% above the five-year average of crude oil supplies for this time of year, but roughly 50% higher than the prior 5 year (2010 - 2014) average of crude oil stocks as of the last Friday in April, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels, and continued rising from there....since our crude oil inventories have generally been rising over the past year and a half, except for during this past summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of April 24th were 12.1% above the 470,567,000 barrels of oil we had in commercial storage on April 26th of 2019, and 21.0% above the 435,955,000 barrels of oil that we had in storage on April 27th of 2018, while at the same time remaining fractionally below the 527,772,000 barrels of oil we had in commercial storage on April 21st of 2017...    

This Week's Rig Count

the US rig count fell by 10% or more for the 4th week in a row during the week ending May 1st, and is now down 62.3% from its interim high at end of 2018....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 57 rigs to 408 rigs this past week, which was the least rigs deployed since June 3rd, 2016, and hence is a 47 month low for the US rig count...that count was also down by 582 rigs from the 990 rigs that were in use as of the May 3rd report of 2019, and 1,521 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put US shale out of business....this week's 12.3% drop was​ also​ the largest percentage rig drop on record, besting the 12.1% decrease seen during the week ending April 17th....

the number of rigs drilling for oil decreased by 53 rigs to 325 oil rigs this week, after falling by 60 oil rigs the prior week, leaving oil rig activity also at its lowest in 47 months, 482 fewer oil rigs than were running a year ago, and about a fifth of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 4 to 81 natural gas rigs, ​leaving the fewest natural gas rigs active since August 26th of 2016, and hence a new 44 month low for natural gas drilling, down by 102 natural gas rigs from the 183 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil & gas, two rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, and one in Lake County, California... a year ago, there were no such "miscellaneous" rigs deployed..

the Gulf of Mexico rig count was down by one rig to 16 rigs this week, with all of those Gulf rigs drilling for oil in Louisiana's offshore waters...that's four less than the rig count in the Gulf a year ago, when 17 rigs were drilling offshore from Louisiana and three rigs were operating in Texas waters...there are no rigs operating offshore elsewhere at this time, nor were there a year ago, so the Gulf rig count is equivalent to the national rig count, just as it has been since the onset of winter...

the count of active horizontal drilling rigs decreased by 52 rigs to 374 horizontal rigs this week, which was the fewest horizontal rigs active since August 12th, 2016, and hence is a 44 month low for horizontal drilling...it was also 499 fewer horizontal rigs than the 873 horizontal rigs that were in use in the US on May 3rd of last year, and nearly a thousand less than the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count was down by 5 to 11 vertical rigs this week, and those were down by 35 from the 46 vertical rigs that were operating during the same week of last year....meanwhile, the directional rig count was unchanged with 23 directional rigs still running this week, but those were still down by 48 from the 71 directional rigs that were in use on May 3rd of 2019....

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the 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 May 1st, the second column shows the change in the number of working rigs between last week's count (April 24th) and this week's (May 1st) count, the third column shows last week's April 24th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of 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 the 3rd of May, 2019...    

May 1 2020 rig count summary

as you can see, this weeks basin totals indicate a decrease of 45 rigs, which is 7 fewer than the decrease of the horizontal rig count nationally, which thus means that 7 horizontal rigs were also shut down in basins not tracked separately by Baker Hughes and hence not shown above...offhand, ​one obvious place where some of those rigs might have been drilling is in Utah, which was down by 5 rigs this week and has both the Uinta and Paradox shale basins that aren't tracked in this report...in addition, 5 rigs were also removed from Oklahoma which aren't accounted for in the basin totals...​meanwhile, ​the rig count in the Denver-Julesburg Niobrara chalk was down by 8, leaving just 7 rigs remaining, with 7 of those most likely pulled from Colorado while one Niobrara rig was shut down in Wyoming....​next, checking the rig losses in the Texas part of Permian basin, we find that 18 rigs were pulled out of Texas Oil District 8, or the core Permian Delaware, and 5 more rigs were stacked in Texas Oil District 7C, or the southern Permian Midland, and hence the Permian in Texas saw a total reduction of 23 rigs...that total means that the 4 rigs that were shut down in New Mexico must have been drilling in the western Permian Delaware, to bring the national Permian reduction to 27 rigs...elsewhere in Texas, 2 rigs were pulled out of Texas Oil District 1 and 3 rigs were pulled from Texas Oil District 2, which together would account for the 5 rig reduction in Eagle Ford shale, which is now down to 29 oil rigs and just one seeking natural gas....Texas Oil District 6 was also down a rig, thus accounting for one of the Haynesville shale rig losses, while another Haynesville shale rig that had been deployed in northwest Louisiana was also shut down....those two Haynesville rigs, the two Pennsylvania Marcellus rigs, and one of the Eagle Ford rigs account for the natural gas rig reductions, while a natural gas rig actually started drilling elsewhere, in a basin not tracked by Baker Hughes...

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