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, December 24, 2017

US oil, products exports rising again as international markets command premium prices

after slipping a bit on Monday, oil prices moved steadily higher the rest of the week and approached a two and a half year high in closing up for the first time in four weeks....after initially trading as high as $57.78 a barrel on Monday, US light sweet crude for January delivery fell 14 cents for the day to end at $57.16 a barrel, as the EIA forecast that US crude production from shale would grow by 94,000 barrels a day during January, negating upward price pressure from the North Sea pipeline outage and a Nigerian oil worker's strike that drove international oil prices 18 cents higher...with international prices up 59 cents on Tuesday on the cutoff of North Sea supplies, US oil prices also rose, with the expiring January WTI contract closing 30 cents higher at $57.46 a barrel on bullish overseas news and expectations that US crude stockpiles data would show a fourth consecutive large weekly drawdown of US crude supplies...now trading oil contracts for February, which had closed Tuesday up 34 cents to $57.56 a barrel, that front month US crude price rose 53 cents to close at $58.09 a barrel on Wednesday, after the EIA data indicated an even larger-than-expected drop in US crude oil inventories...U.S. crude futures for February then rose for a third straight day on Thursday to settle up 27 cents at $58.36 a barrel, their second highest level of the year, on a follow-thru on the previous day's news of falling crude inventories...US crude prices then tacked on another 11 cents in thin pre-holiday trading on Friday, on a promise from Russian Energy Minister Alexander Novak that OPEC and Russia would exit their output cuts smoothly to avoid creating any new oil surplus, closing the week with a 2% gain at $58.47 a barrel, the highest weekly close since November 24th and the second highest close since June 22nd, 2015...

at the same time, international oil prices, as represented by trading in February contracts for North Sea Brent crude, were up every day during the past week, rising over $2 or 3.2% during the week to close to $65.25 a barrel, its highest price in more than two years...that means the premium of international oil prices over US prices is again approaching 12%, a premium that encouraged weeks of record high US oil exports just two months ago...in like manner, premiums for LNG in Asia and Europe saw a record spread over the benchmark price for US natural gas as set at the Henry Hub in Louisiana this week...with the price of LNG delivered to Japan, Korea and Malaysia averaging $10.85 per mmBTU early this week, LNG delivered to northeast Asia was $8.11 per mmBTU higher than the US price, while the UK's natural gas price climbed to as high as $8.83 per mmBTU over the US price...with US natural gas for January delivery hitting a cycle low of $2.598 per mmBTU on Thursday before closing the week at  $2.667 per mmBTU, US natural gas suppliers could be in a position to triple what they get from domestic natural gas customers, even after paying for liquefaction and transportation costs, if they could export larger quantities of that gas today...with the weekly Natural Gas Storage Report from the EIA indicating that US natural gas supplies are now 5% below their level of the same week of a year ago, our domestic stocks are not yet really threatened, but that will certainly be something to watch as the wave of new US LNG export capacity additions starts to come online in the 2nd half of next year..

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending December 15th, showed that our oil exports jumped back to near record levels while our refineries ran at an above normal pace for this time of year, which meant we again had to pull quite a bit of oil out of storage to meet those needs...our imports of crude oil rose by an average of 471,000 barrels per day to an average of 7,834,000 barrels per day during the week, while our exports of crude oil rose by an average of 772,000 barrels per day to average 1,858,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 5,976,000 barrels of per day during the week, 301,000 barrels per day less than the net imports of the prior week...at the same time, field production of crude oil from US wells rose by 9,000 barrels per day to another record high of 9,789,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 15,765,000 barrels per day during the reporting week...  

during the same week, US oil refineries were using 17,063,000 barrels of crude per day, 111,000 barrels per day more than they used during the prior week, while at the same time 873,000 barrels of oil per day were being withdrawn from oil storage facilities in the US....hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was 425,000 fewer barrels per day than what refineries reported they used during the week...to account for that disparity, the EIA needed to insert a (+425,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, a metric that is labeled in their footnotes as "unaccounted for crude oil"...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports slipped to an average of 7,432,000 barrels per day, 6.2% less than the 7,921,000 barrels per day average imported over the same four-week period last year....the 873,000 barrel per day decrease in our total crude inventories came about on a 928,000 barrel per day withdrawal from our commercial stocks of crude oil, which was slightly offset by a 55,000 barrel per day addition of oil to our Strategic Petroleum Reserve, likely a return of oil that was borrowed from the Reserve during the post Hurricane Harvey emergency...this week's 9,000 barrel per day increase in our crude oil production came by way of a 15,000 barrel per day increase in output from wells in the lower 48 states, which was partially offset by a 6,000 barrels per day decrease in output from Alaska....the 9,789,000 barrels of crude per day that were produced by US wells during the week ending December 15th was yet another new record high for US output, 11.6% more than the 8,770,000 barrels per day we were producing at the end of 2016, and up 16.1% from the recent output nadir of 8,428,000 barrels per day produced during the last week of June 2016...

US oil refineries were operating at 94.1% of their capacity in using those 17,063,000 barrels of crude per day, up from 93.4% of capacity the prior week, and the highest capacity utilization on record for the 2nd week of December....the 17,063,000 barrels of oil that were refined this week were 3.7% less than the record 17,725,000 barrels per day that were being refined at the end of August, but 2.4% more than the 16,658,000 barrels of crude per day that were being processed during week ending December 16th, 2016, when refineries were operating at 91.5% of capacity, and 10.4% above the 10-year seasonal average for this time of the year... 

even with the increase in the amount of oil being refined, gasoline output from our refineries was slightly lower, as it decreased by 64,000 barrels per day to 10,065,000 barrels per day during the week ending December 15th, after rising last week on slower refining....that decrease meant our gasoline production was 0.8% lower than the 10,150,000 barrels of gasoline that were being produced daily during the week ending December 16th of last year...at the same time, our  refineries' production of distillate fuels (diesel fuel and heat oil) fell by 41,000 barrels per day to 5,206,000 barrels per day....however, that was still 1.6% more than the 5,122,000 barrels per day of distillates that were being produced during the the same week a year ago....     

with the relatively small decrease in our gasoline production, our gasoline inventories at the end of the week rose by 1,237,000 barrels to 227,783,000 barrels by December 15th, their sixth increase in a row...that was despite an increase of 335,000 barrels to 9,426,000 barrels per day in our domestic consumption of gasoline, while our exports of gasoline also rose by 73,000 barrels per day to 804,000 barrels per day, and while our imports of gasoline inched up by 4,000 barrels per day to 487,000 barrels per day....however, with significant gasoline supply withdrawals in 15 out of the prior 21 weeks, our gasoline inventories are still down by 6.0% from their pre-summer high of 242,444,000 barrels, and down fractionally from last December 16th's level of 228,736,000 barrels, even as they are roughly 4.1% above the 10 year average of gasoline supplies for this time of the year...    

meanwhile, with the small drop in our distillates production, our supplies of distillate fuels rose by 769,000 barrels to 128,845,000 barrels over the week ending December 15th, in just the fifth increase in distillates supply in sixteen weeks...that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 454,000 barrels per day to 3,926,000 barrels per day, even as our exports of distillates rose by 338,000 barrels per day to 1,550,000 barrels per day, while our imports of distillates rose by 231,000 barrels per day to a 33 week high of 380,000 barrels per day...even after this week’s increase, our distillate inventories were still 16.1% lower at the end of the week than the 153,515,000 barrels that we had stored on December 16th, 2016, and roughly 5.4% lower than the 10 year average of distillates stocks at this time of the year

finally, with the week's increase in our oil exports and the increase in our refining, our commercial crude oil inventories fell for the 30th time in the past 37 weeks, decreasing by 6,495,000 barrels, from 442,986,000 barrels on December 8th to a 26 month low of 436,491,000 barrels on December 15th....while our oil inventories as of December 15th were thus 10.1% below the 485,449,000 barrels of oil we had stored on December 16th of 2016, and 3.5% lower than the 452,477,000 barrels of oil that we had in storage on December 18th of 2015, they were still 23.0% greater than the 354,733,000 barrels of oil we had in storage on December 19th of 2014, when the buildup to an oil glut in the US was just getting started... 

This Week's Rig Count

US drilling activity increased for the sixth time in seven weeks but for just the 9th time out of the last 21 weeks during the week ending December 22nd, but just barely...Baker Hughes reported that the total count of active rotary rigs running in the US increased by 1 rig to 931 rigs in the week ending on Friday, which was also 278 more rigs than the 653 rigs that were deployed as of the December 23rd report in 2016, while it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil was unchanged at 747 rigs this week, which was still 224 more oil rigs that were running a year ago, while the week's oil rig count remained far below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas formations rose by 1 rig to 184 rigs this week, which was still only 55 more gas rigs than the 129 natural gas rigs that were drilling a year ago, and way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

drilling activity in the Gulf of Mexico was unchanged at 19 rigs this week, which was down from the 24 rigs that were drilling from platforms in the Gulf of Mexico a year ago...with no other offshore drilling elsewhere, the national offshore count was also at 19 rigs this week, but a year ago there was also a rig drilling offshore from Alaska, for a national total of 25 offshore rigs...

this week's count of active horizontal drilling rigs was unchanged at 801 horizontal rigs this week, but it was still up by 275 rigs from the 526 horizontal rigs that were in use in the US on December 23rd of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the vertical rig count was up by 4 rigs to 64 vertical rigs this week, but that was still down from the 69 vertical rigs that were working during the same week last year....on the other hand, the directional rig count was down by 3 rigs to 66 rigs this week, which was still up from the 58 directional rigs that were deployed on December 23rd of 2016...

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of December 22nd, the second column shows the change in the number of working rigs between last week's count (December 15th) and this week's (December 22nd) count, the third column shows last week's December 15th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 23rd of December, 2016...              

December 22nd 2017 rig count summary

there appears to be a few unexplained disparities between the state rig counts from those in the major basins this week....first, note that the central Oklahoma Cana Woodford saw a 4 rig increase, despite the state count being down by a single rig...that would suggest that a net of 4 rigs drilling conventional wells were pulled out of the state, since the only other basin in Oklahoma to show a change was the Mississippian on the Kansas border....then, noting the 4 rig increase in New Mexico, it's possible 3 of those were in the Permian, since the west Texas districts that include the Permian in that state were down by 2 rigs, while drilling in the Dallas area Barnett shale increased by two rigs...also note that all the basin count changes involve oil rigs; the single natural gas rig addition was in an "other" unnamed basin...and in addition to the changes in the major producing states shown above, Alabama also added a rig this week and now has two; that's also the same number of rigs they had active as of December 23rd 2016...

 

note: there’s more here..

No comments: