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, August 28, 2016

total supplies of everything oil jump 6.6 million barrels to another new record as rig count drops

oil prices bounced around this week and ended somewhat lower, as news of increasing international oil production and the building domestic product glut dampened speculative buying on the unlikely prospect of an OPEC-Russian production freeze...the 7 day price rally that helped push prices up over 22% from their lows in the first three weeks of August ended on Monday, as forced short squeeze buying came to an end amid news of increased Chinese, Iraqi and Nigerian exports, sending the expiring September WTI oil contract down 3% to close at $47.05 a barrel, while the new October oil contract fell $1.70, or 3.5% to close at $47.41 a barrel...oil production freeze talk returned to the fore on Tuesday, on reports that Iran was 'sending positive signals' that it may support an OPEC attempt to support prices as October oil, now the widely quoted front month contract, closed up 69 cents at $48.10 a barrel, despite a report from the American Petroleum Institute that crude oil stockpiles had increased by nearly 4.5 million barrels, the biggest buildup in 4 months...oil prices were then slammed on Wednesday and closed down $1.33 at $46.77 a barrel after the EIA reported increased inventories across the entire oil and oil products complex, even though their 2.5 million barrel build of crude was 2 million less than the API had telegraphed less than 24 hours earlier...oil prices then returned to the plus column on Thursday, rising 56 cents to $47.33 a barrel, on positive economic reports and further cooperative statements from Iran’s oil minister...oil rose again on Friday after an Iranian TV report that Yemeni forces had fired ballistic missiles at Saudi oil facilities and held on to most of those gains to close the week 1.8% lower at $47.64 a barrel, after Baker Hughes reported the U.S. oil rig count was unchanged for the week....

The Latest Oil Stats from the EIA

as mentioned, the oil data for the week ending August 19th from the US Energy Information Administration showed increases in inventories of oil and of all major refined products, exacerbated by oil imports that were near a 4 year high, even as refineries returned to operating at a seasonable level...however, this week's crude oil fudge factor included to make the weekly U.S. Petroleum Balance Sheet (line 13) balance was again a large positive, at +523,000 barrels per day, which meant that 523,000 more barrels of oil per day showed up in our final consumption and inventory figures this week than were accounted for by our production or import figures, meaning one or several of this week's metrics were off by that amount, so we have to again take this week's data with a large grain of salt...that's now the 9th week in a row that we've seen a large positive adjustment, and as a result this year's cumulative daily average of that weekly statistical adjustment is now up to a positive 93,000 barrels per day, a reversal of the negative adjustment we saw through the first 6 months of this year, when much of what we had appeared to have produced or imported wasn't showing up in the final consumption or inventory figures... 

at any rate, the EIA reported that our imports of crude oil rose by an average of 449,000 barrels per day to an average of 8,738,000 barrels per day during the week ending August 19th, which was the second most oil we've imported in any week since October 19th of 2012....this week's imports were more than 1.44 million barrels per day, or 21.7%, more than the 7,199,000 barrels of oil per day we imported during the week ending August 21st a year ago, and the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) rose to an average of 8.5 million barrels per day, 13.3% higher than the same four-week period last year... 

at the same time, our field production of crude oil fell by 49,000 barrels per day to an average of 8,548,000 barrels per day during the week ending August 19th, as a 6,000 barrel per day increase in Alaskan oil production was offset by a 55,000 barrel per day drop in production from the lower 48 states...that left the week's oil production down by 8.5% from the 9,337,000 barrels we produced during the week ending August 21st of 2015, and 11.1% lower than the record 9,610,000 barrel per day oil production that we saw during the week ending June 5th last year...our oil production for the week ending August 21st is now 671,000 barrels per day lower than we what were producing at the beginning of this year...  

meanwhile, crude oil used by US refineries dropped by an average of 186,000 barrels per day to an average of 16,679,000 barrels of crude per day during the week ending August 19th, as the US refinery utilization rate fell to 92.5% for that week, down from 93.5% of capacity the prior week, and down from the refinery utilization rate of 94.5% logged during the week ending August 21st last year...the drop in refining was entirely due to a 244,000 barrel per day drop in oil used on the Gulf Coast, where refineries were slowed by flooding in Louisiana and a refinery fire in Texas....product bound east cost crude oil refining actually rose by 60,000 barrels per day, though their capacity utilization only rose 85.5%, in contrast to a 94.4% capacity utilization rate of a year ago, when a glut of products was not a problem...nationally, the amount of crude oil refined this week was 21,000 barrels more than the 16,658,000 barrels of crude per day US refineries used during the week ending August 21st last year, and 1.6% more than the equivalent week in 2014... 

the 186,000 barrel per day drop in crude oil being refined in turn led to a 155,000 barrels per day drop in our refineries’ production of gasoline, which fell to 10,035,000 barrels per day during the week ending August 19th...still, that was 2.6% higher than our gasoline output of 9,782,000 barrels per day during the week ending August 21st last year, and 9.6% higher than the gasoline production of the equivalent week of 2014....at the same time, refinery output of distillate fuels (diesel fuel and heat oil) was also down, falling by 90,000 barrels per day to 4,849,000 barrels per day during the week ending August 19th....that left our distillates output 1.4% less than the 4,906,000 barrels per day that was being produced during the same week last year, and 1.3% less than the distillates production of the equivalent week of 2014... 

even with production of both gasoline and distillates down however, supplies of both left over at the end of the week were higher than last week, as were supplies of all other major refined products...our gasoline inventories rose by 36,000 barrels to 232,695,000 barrels as of August 19th, as our gasoline imports rose by 191,000 barrels per day to 801,000 barrels per day...that left this week's gasoline inventories 8.5% higher than the 214,434,000 barrels of gasoline that we had stored on August 21st last year, and also 9.6% higher than the 212,314,000 barrels of gasoline we had stored on August 22nd of 2014...similarly, our distillate fuel inventories rose by 122,000 barrels to 153,257,000 barrels by August 19th, which left our distillate inventories 2.3% above the distillate inventories of 149,836,000 barrels of August 21st last year, and 24.8% above the distillate inventories of 122,794,000 barrels of August 22nd, 2014...  

inventories of all other major products rose as well....our stockpiles of propane/propylene rose by 2,391,000 barrels to 96,135,000 barrels last week, which meant they were 0.4% above the then record high of 95,724,000 set during the week of August 21st last year, and 28.7% higher than the propane/propylene inventories of the same week in 2014...inventories of NGPL (Natural Gas Plant Liquids) and LRG (Liquefied Refinery Gases) other than propane/propylene rose by 2,628,000 barrels to 148,086,000 barrels as of August 19th, 17.2% higher than the 126,335,000 barrels we had stored as of August 21st last year, and 15.6% higher than the equivalent week in 2014...inventories of kerosene type jet fuel rose by 102,000 barrels to 41,751,000 barrels as of August 19th, not up much from our jet fuel stockpiles of 41,694,000 barrels on August 21st last year, but 20.3% higher than our 34,719,000 barrels of jet fuel supplies we had stored on August 22nd of 2014...and stockpiles of residual fuel oils rose by 1,443,000 barrels to 40,493,000 barrels as of August 19th, 1.9% higher than the 39,719,000 barrels we had stored a year earlier, and 11.7% higher than the 36,248,000 barrels of residual fuel oils we had stored on August 22nd 2014...

lastly, with the big jump in imports and the refinery slowdown, our inventories of crude oil that has yet to be refined into any of the above products also rose, increasing by 2,501,000 barrels to 523,594,000 barrels as of August 19th, the 4th oil inventory increase in 5 weeks...thus we ended up with 16.2% more crude oil in storage than the 450,761,000 barrels we had stored as of the same weekend a year earlier, and 45.3% more crude oil than the 360,475,000 barrels we had stored on August 22nd of 2014...

tying it all together, the chart below, from Zero Hedge, shows the aggregate of all oil and oil products we had in storage for every week since the beginning of 1990; it's a compact version of the interactive graph that accompanies the EIA's Weekly U.S. Ending Stocks of Crude Oil and Petroleum Products page...as of August 19th, our total stockpiles of oil and oil products set a new record at 1,400,176,000 barrels, the 23rd new record high set in 2016, and 6,613,000 barrels more than the record set for this metric last week...we've now set new records for total supplies 8 weeks in a row, adding a total of 28.3 million barrels of oil and oil products to what we already have stored over that 8 week stretch....you might also note from that chart that our 1.4 billion barrels of total supply is now more than 30% higher than the 2010 to 2014 average, and 40% higher than the 1 billion barrel average of the decade before that...

August 24 2016 total EIA inventory for week ending August 19

This Week's Rig Counts

US drilling activity fell for only the 2nd time in the past 13 weeks during the week ending August 26th, following the prior string of 39 weeks where the rig count had not risen at all...Baker Hughes reported that the total count of active rotary rigs running in the US fell by 2 rigs to 489 rigs as of Friday, which was also down from the 877 rigs that were deployed as of the August 28th report last year, and down from the recent high of 1929 rigs that were in use on November 21st of 2014...the number of rigs drilling for oil was unchanged this week at 406, but was still down from the 675 oil directed rigs that were in use a year earlier, and down from the recent high of 1609 oil rigs that were drilling on October 10, 2014, while the count of drilling rigs targeting natural gas formations fell by 2 rigs to 81 rigs this week, which ties the previous all time low for natural gas rigs set 3 weeks earlier on August 5th -- prior to this year, there is no record of less than 150 natural gas rigs deployed in the US in any week...gas rigs were also down from the 202 natural gas rigs that were drilling on August 28th year ago, and down from the recent high of 1,606 rigs that were drilling for natural gas on August 29th, 2008...there were also two rigs drilling this week that were classified as miscellaneous, unchanged from last week but up from the same week a year ago, when there were no miscellaneous rigs deployed....  

one of the platforms that had been drilling offshore of Louisiana in the Gulf of Mexico was shut down this week, leaving 17 still active in the Gulf of Mexico and offshore nationally at week end, down from 29 rigs drilling in the Gulf and a total of 30 rigs offshore nationally a year ago...however, there was also another rig set up to drill through an inland lake in southern Louisiana, which brought the inland waters rig count up to 4 rigs, which was the same as a year earlier...

the number of working horizontal drilling rigs fell by 3 rigs this week after rising by 7 rigs last week, which left the count of active horizontal rigs at 379 rigs, which was still down from the 672 horizontal rigs that were in use on August 28th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...in addition, the vertical rig count dropped by 2 rigs to 62 rigs this week, which was down from the 125 vertical rigs that were drilling in the US during the same week last year...meanwhile, the directional drilling rig count rose by 3 rigs to 48 rigs, which was still down from the 80 directional rigs that were deployed during the same week last year...     

the details on this week's changes in drilling activity by state and shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes which shows those changes...the first table below shows weekly and annual rig count changes for the major producing states, and the second table shows weekly and annual rig count changes for the major geological oil and gas basins...in both tables, the first column shows the active rig count as of August 26th, the second column shows the change in the number of working rigs between August 19th and August 26th, the third column shows the August 19th rig count, the 4th column shows the change in the number of rigs running this Friday from the equivalent Friday in August a year ago, and the 5th column shows the number of rigs that were drilling at the end of that week a year ago, which in this week's case was August 28th of 2015:    

August 26 2016 rig count summary

once again, the Permian basin of western Texas shows the only significant increase in the rig count this week, as has typically been the case during the 13 weeks that oil drilling has generally been on the increase...on the other hand, there were two rigs removed from the Denver-Julesburg-Niobrara chalk of the Rockies front range, the first pullback of that magnitude in that basin since February; the rig count there had previously climbed from 12 to 18 over the prior three months...also note the removal of a single rig from the Utica of Ohio, where 13 rigs remain active, down from 20 rigs a year ago...also, not shown on the state table above was the decrease from 3 rigs to 2 rigs in Alabama, which brings them back to the same level of drilling activity as they saw a year ago, and the increase from 3 rigs to 4 rigs in Mississippi, which is also an increase from the 3 rigs working in Mississippi as of August 28th a year ago…

 

note: there's more here...

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