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 18, 2019

OPEC reports July's oil output was 2 million barrels per day short of demand; DUCs down most in 33 months as fracking at a 54 month high

oil prices managed to end with a small increase in a week of volatile trading after Trump blinked and delayed the tariffs that he had imposed on China that had sent the markets spiraling lower over the past two weeks...after falling 8% into a bear market on Trump's tariff threats before recovering more than 6% to close at $54.40 a barrel last week, prices of US crude for September delivery overcame fears of a global economic downturn that had pushed prices down to $53.54 early on Monday and moved higher near the close, ending with a gain of 43 cents at $54.93 a barrel, as signals that Kuwait & the Saudis would continue to reduce global supplies supported an afternoon rally...oil prices then shot up more than 4 percent on Tuesday after Trump bowed to recession fears and said he would delay the tariffs on China he'd announced just a dozen days earlier, with the September oil contract ending $2.17 higher at $57.10 a barrel, the biggest one day price jump so far this year...however, oil prices reversed on Wednesday and erased Tuesday's gains in falling nearly 6% to $53.97 a barrel after overnight industry reports of a surprise crude and gasoline supply increase and shrinking German GDP data were followed by the EIA's report that crude inventories had indeed increased, before prices steadied in the afternoon to end at $55.23 a barrel, still a loss of $1.87 on the day...oil prices continued sliding on recession fears and Chinese trade threats on Thursday as Trump's weakness in delaying the tariffs was mocked in the Chinese press, with US crude closing down 1.4% at $54.47 a barrel even as Brent, the international oil benchmark, ended 2.4% lower at $58.05 a barrel...but oil prices rebounded with the markets on Friday after data showed an unexpectedly large increase in US retail sales, but the gains were capped by an OPEC report warning of slowing economic growth ahead, with oil prices settling 40 cents higher at $54.87 a barrel...with Friday's small gain, oil prices managed to eke out a 0.7% increase for the week, their first weekly gain in three...

natural gas prices also managed to end with a small increase, mostly on the back of what was considered a bullish storage report...after falling for a fourth week in a row and hitting a 39 month low last week, natural gas contracted for September delivery fell 1.4 cents to $2.105 per mmBTU on Monday, despite forecasts that the remainder of August would be warmer and see greater demand than the same period of a year ago...but prices rose 4.2 cents on the same forecast on Tuesday, and then slipped back four-tenths of a cent on Wednesday in a continuation of the volatility as prices tested multi-year lows over the previous two weeks...however, prices jumped nearly 13 cents with the release of the storage report on Thursday and ended the day 8.9 cents higher at $2.232 per mmBTU...however, with the weak storage build dismissed as being due to pipeline issues, gas prices fell back 3.2 cents to end the week at $2.200 per mmBTU, still a gain of 8.1 cents, or 3.8% for the week, the first increase in 5 weeks...

the natural gas storage report for the week ending August 9th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 49 billion cubic feet to 2,738 billion cubic feet by the end of the week, which meant our gas supplies were 357 billion cubic feet, or 15.0% more than the 2,346 billion cubic feet that were in storage on August 9th of last year, while still 111 billion cubic feet, or 3.9% below the five-year average of 2,849 billion cubic feet of natural gas that have been in storage as of the 9th of August in recent years....this week's 49 billion cubic feet injection into US natural gas storage was significantly below the 57 billion cubic feet injection predicted by analysts surveyed by S&P Global Platts, while it matched the average 49 billion cubic feet of natural gas that have been added to gas storage during the first full week of August over the past 5 years, the 20th such average or above average storage build in the last 22 weeks...however, the 1,560 billion cubic feet of natural gas that have been added to storage over the 20 weeks of this injection season has now fallen behind the record 1572 billion cubic feet of natural gas that were injected into storage over the same 20 weeks of the 2014 natural gas injection season, but still remains well above the other years on record...    

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending August 9th indicated that because our refinery throughput fell while an increase in our oil imports partially offset an increase in our oil exports, we had surplus oil to add to storage for the 2nd week in a row.....our imports of crude oil rose by an average of 566,000 barrels per day to an average of 7,714,000 barrels per day, after rising by an average of 485,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 818,000 barrels per day to an average of 2,683,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,031,000 barrels of per day during the week ending August 9th, 252,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, the production of crude oil from US wells was reported to be unchanged at 12,300,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 17,331,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly processing 17,302,000 barrels of crude per day during the week ending August 9th, 475,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 225,000 barrels of oil per day were being added to the supplies of oil stored in the US....hence, 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 196,000 barrels per day less than what was reportedly added to storage and 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 inserted a (+196,000) 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"... (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) indicated that the 4 week average of our oil imports rose to an average of 7,138,000 barrels per day last week, which was still 12.0% less than the 8,116,000 barrel per day average that we were importing over the same four-week period last year...the 225,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be unchanged at 12,300,000 barrels per day even though the rounded estimate of the output from wells in the lower 48 states rose by 100,000 barrels per day to 11,900,000 barrels per day because a 20,000 barrels per day decrease to 433,000 barrels per day in Alaska's oil production lowered the final rounded national production total by 100,000 barrels per day (EIA"s math, not mine)...last year's US crude oil production for the week ending August 3rd was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was 12.8% above that of a year ago, and 45.9% 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 94.8% of their capacity in using 17,302,000 barrels of crude per day during the week ending August 9th, down from 96.4% of capacity the prior week, but still a refinery utilization rate that is typical for mid summer....however, the 17,302,000 barrels per day of oil that were refined this week were 3.8% below the record 17,981,000 barrels of crude per day that were being processed during the week ending August 10th, 2018, when US refineries were operating at 98.1% of capacity....

with the big decrease in the amount of oil being refined, gasoline output from our refineries was somewhat lower, decreasing by 218,000 barrels per day to 10,203,000 barrels per day during the week ending August 9th, after our refineries' gasoline output had increased by 5,000 barrels per day the prior week....even so, this week's gasoline production was just fractionally below the 10,234,000 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) fell by 209,000 barrels per day to 5,077,000 barrels per day, after our distillates output had increased by 122,000 barrels per day the prior week....but with this week's decrease, our distillates production was 4.9% less than the 5,337,000 barrels of distillates per day that were being produced during the week ending August 10th, 2018.... 

with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week fell for the sixth time in 9 weeks and for the 19th time in twenty-five weeks, decreasing by 1,412,000 barrels to 233,760,000 barrels during the week to August 9th, after our gasoline supplies had risen by 4,437,000 barrels over the prior week....our gasoline supplies also decreased this week because the amount of gasoline supplied to US markets increased by 282,000 barrels per day to 9,932,000 barrels per day, and because our imports of gasoline fell by 412,000 barrels per day to 805,000 barrels per day, while our exports of gasoline fell by 324,000 barrels per day to 453,000 barrels per day...after this week's decrease, our gasoline supplies remained fractionally higher than last August 10th's inventory level of 233,128,000 barrels, and are still roughly 4% above the five year average of our gasoline supplies at this time of the year...

with the decrease in our distillates production, our supplies of distillate fuels fell for the 13th time in the past 22 weeks, decreasing by 1,938,000 barrels to 135,513,000 barrels during the week ending August 9th, after our distillates supplies had increased by 1,529,000 barrels over the prior week...our distillates supplies decreased this week because our imports of distillates fell by 127,000 barrels per day to 126,000 barrels per day while our exports of distillates rose by 186,000 barrels per day to 1,621,000 barrels per day, and while the amount of distillates supplied to US markets, a proxy for our domestic demand, decreased by 27,000 barrels per day to 3,859,000 barrels per day....but even after this week's inventory decrease, our distillate supplies were still 5.1% higher than the 128,989,000 barrels of distillates that we had stored on August 10th, 2018, while still around 3% below the five year average of distillates stocks for this time of the year...

finally, with the decrease in our refinery throughput, our commercial supplies of crude oil in storage rose for the second time in nine weeks but for the seventeenth time in 30 weeks, increasing by 1,580,000 barrels, from 438,930,000 barrels on August 2nd to 440,510,000 barrels on August 9th...after that increase, our crude oil inventories were roughly 3% above the five-year average of crude oil supplies for this time of year, and were about 32% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the 2nd Friday of August, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories had generally been rising since this past Fall up until the most recent 9 weeks, after generally falling until then through most of the prior year and a half, our oil supplies as of August 9th were still 6.4% above the 414,194,000 barrels of oil we had stored on August 10th of 2018, but at the same time were 5.6% below the 466,492,000 barrels of oil that we had in storage on August 11th of 2017, and 10.2% below the 490,461,000 barrels of oil we had in commercial storage on August 12th of 2016...  

OPEC's Monthly Oil Market Report

this week we're also going to review OPEC's August Oil Market Report (covering July OPEC & global oil data), which was released on Friday of this past week and is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 60 of that report (pdf page 70), 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...

July 2019 OPEC crude output via secondary sources

as we can see from the above table of oil production data, OPEC's oil output fell by 246,000 barrels per day to 29,609,000 barrels per day in July, from their revised June production total of 29,855,000 barrels per day...however that June figure was originally reported as 29,830,000 barrels per day, so that means their production for July was actually a 221,000 barrel per day decrease from the previously reported production figures (for your reference, here is the table of the official June OPEC output figures as reported a month ago, before this month's revisions)...

as you can see, the Saudi's 134,000 barrel per day output cut made up the lion's share of OPEC's July decrease. but most other OPEC members also cut their output proportionately as well...however, that relatively small 32,000 barrels per day increase in the output from Iraq that you see above means they are well over thei output allocation as 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 which were extended at their July 1st meeting a a little over a month ago...in addition, despite the small decrease in July output from Nigeria, their output also remains well above quota, as can be seen in the table of OPEC production allocations we've included below:

February 6 2019 Platts on OPEC allocations

the above table came from a February 6th post on Saudi cuts and OPEC allocations at S&P Global Platts, and it shows average daily production quota in millions of barrels of oil per day for each of the OPEC members as was agreed to at their December 2018 meeting and has now been extended through March 2020 as of their recent meeting....note that Venezuela and Iran, whose oil exports are being sanctioned by the Trump administration, and Libya, which has been beset by a civil war, are exempt from any production quotas, and that among them only Libya has been producing a bit more than they did in the 4th quarter of 2018, which you can see in the third column of the OPEC production table above...

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 August 2017 to July 2019, and it comes from page 61 (pdf page 71) of the August 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... 

July 2019 OPEC report global oil supply

despite the big decrease in OPEC's production from what they produced a month ago, their preliminary estimate indicates that total global oil production still rose by 0.23 million barrels per day to 98.71 million barrels per day in July, an increase that came after June's total global output figure was revised down by 80,000 barrels per day from the 98.56 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 480,000 barrels per day in July after that revision, with higher oil production from Canada, Norway, the UK, Australia, India, Brazil and Azerbaijan the major reasons for the non-OPEC output increase in July.... the 98.71 million barrels per day produced globally in July was also 0.71 million barrels per day, or 0.7% higher than the revised 98.39 million barrels of oil per day that were being produced globally in July a year ago (see the August 2018 OPEC report (online pdf) for the originally reported July 2018 details)...with the decrease in OPEC's output, their July oil production of 29,609,000 barrels per day slipped to 30.0% of what was produced globally during the month, down from the revised 30.3% share they contributed in June....OPEC's July 2018 production was reported at 32,323,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding Qatar from last year's total and new member Congo from this year's, are now producing 2,424,000 fewer barrels per day of oil than they were producing a year ago, when they accounted for 32.9% of global output, with a 1,524,000 barrel per day drop in output from Iran, a 689,000 barrel per day decrease in the output from Saudi Arabia, and a 534,000 barrel per day decrease in the output from Venezuela from that time more than offsetting the year over year production increases of 414,000 barrels per day from Libya, 197,000 barrels per day from Iraq, and 112,000 barrels per day from the Emirates...   

despite the 230,000 barrels per day increase in global oil output that was seen during July, there was still a large shortfall in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...   

July 2019 OPEC report global oil demand

the table above came from page 33 of the August OPEC Monthly Oil Market Report (pdf page 43), and it shows regional and total oil demand in millions of barrels per day for 2018 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2019 over the rest of the table...on the "Total world" line in the fourth column, we've circled in blue the figure that's relevant for July, which is their revised estimate of global oil demand during the third quarter of 2019...

OPEC has estimated that during the 3rd quarter of this year, all oil consuming regions of the globe will using 100.69 million barrels of oil per day, which was revised from their estimate of 100.61 million barrels of oil per day for the 3rd quarter a month ago....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 only producing 98.71 million barrels per day during July, which means that there was a shortfall of around 1,980,000 barrels per day in global oil production when compared to the demand estimated for the month...

in addition, the downward revision of 80,000 barrels per day to June's global output that's implied in this report, combined with the 10,000 barrels per day upward revision to 2nd quarter demand that we've encircled in green, means that the 680,000 barrels per day shortfall that we had previously figured for June based on last month's figures would now be revised to a deficit of 790,000 barrels per day....likewise, the 10,000 barrels per day upward revision to 2nd quarter demand would mean that we'd have to revise our global oil deficit for May to 1,160,000 barrels per day, and revise our global oil deficit for April to 1,030,000 barrels per day...hence, for the 2nd quarter as a whole, the world's oil producers were producing 937,000 barrels per day less than what was needed...

note that in green we've also circled an upward revision of 30,000 barrels per day to first quarter demand...that means that the global oil surplus of 190,000 barrels per day we had previously figured for March would have to be revised to a global oil surplus of 160,000 barrels per day...similarly, the 640,000 barrel per day global oil output surplus we had for February would now be a 610,000 barrel per day global oil output surplus, and the 550,000 barrel per day global oil output surplus we had for January would be revised to a 520,000 barrel per day oil output surplus..

our green ellipse above also highlights that OPEC has revised 2018's oil demand 80,000 barrels per day higher...when demand for 2018 was last revised in April, we recomputed our 2018 figures and figured that for all of 2018, global oil demand exceeded production by roughly 18,040,000 barrels...this revision means that the 2018 shortfall was 80,000 barrels per day higher, or a total shortfall of roughly 47,240,000 barrels of oil for the year as a whole..

This Week's Rig Count

the US rig count rose for the first time in a dozen weeks and for just the 3rd time in the past half year during the week ending August 16th, but still remains 13.7% lower year to date....Baker Hughes reported that the total count of rotary rigs running in the US rose by 1 rig to 935 rigs this past week, which was still down by 122 rigs from the 1057 rigs that were in use as of the August 17th report of 2018, and less than half of the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil increased by 6 rigs to 770 rigs this week, which was still 99 fewer oil rigs than were running a year ago, and quite a bit below 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 rigs to 165 natural gas rigs, a 16 month low for gas rig activity and down by 21 rigs from the 186 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 August 29th, 2008...in addition, a rig classified as miscellaneous was shut down this week, leaving none such operating, down from the 2 "miscellaneous" rigs that were drilling a year ago...

the rig count in the Gulf of Mexico was up by 2 to 25 rigs this week, as two more rigs began operating off the shore of Louisiana...that brought the offshore Louisiana count up to 25, making for a net increase of 6 Gulf of Mexico rigs from the 19 rigs that were deployed in the Gulf in the same week a year ago, when 17 rigs were drilling in Louisiana waters and two were deployed offshore from Texas...in addition, there continues to be two rigs deployed off the coast of the Kenai Peninsula in Alaska this week, same number as were drilling off the Alaskan shore a year ago, for a total US offshore rig count of 27, up from the total of 21 offshore rigs that were deployed a year ago...in addition to those offshore, southern Louisiana also saw the startup of a rig drilling through an inland body of water, the first such in 4 weeks, but still down from the 2 'inland waters' rigs active in southern Louisiana a year ago

the count of active horizontal drilling rigs was down by 2 to 815 horizontal rigs this week, which was the least horizontal rigs deployed since February 2nd, 2018 and hence a new 18 month low for horizontal drilling...it was also 107 fewer horizontal rigs than the 922 horizontal rigs that were in use in the US on August 17th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, the directional rig count was up by 3 to 68 directional rigs this week, but those were down by 2 from the 70 directional rigs that were operating during the same week of last year... meanwhile, the vertical rig count was unchanged at 52 vertical rigs this week, and those were down by 13 from the 65 vertical rigs that were in use on August 17th of 2018...

the details on this week's changes in drilling activity by state and by major 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 oil & gas producing states, and the second table 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 August 16th, the second column shows the change in the number of working rigs between last week's count (August 9th) and this week's (August 16th) count, the third column shows last week's August 9th active rig count, the 4th column shows the change between the  number of rigs running on Friday and the number running before the equivalent 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 August, 2018...     

August 16 2019 rig count summary

as you can see by the state table above, this week's one rig increase masked a lot of changes around the country...we'll start by looking at Texas, where we find 4 rigs were shut down in Texas Oil District 8, which would be the core Permian Delaware, while the rig counts in Texas Oil Districts 7C and 8A, the Permian Midland, were unchanged...that means that the 2 rig increase in New Mexico included one rig in the western-most reaches of the Permian Delaware, and one rig in a basin not tracked separately by Baker Hughes...the 3 rig increase in Louisiana can be accounted for by the 2 added Gulf of Mexico rigs in the state waters, and the inland waters rig start-up we mentioned earlier....for natural gas, the 4 rig decrease in West Virginia's Marcellus, was completely offset by a 4 rig increase in Pennsylvania's Marcellus, leaving the Marcellus rig count unchanged...meanwhile, the 3 rigs that were pulled out of Ohio included two natural gas rigs that had been operating in the Utica shale, and the "miscellaneous' rig that had been drilling a shallow well in Sandusky county...in addition, a natural gas rig was shut down in the Cana Woodford of Oklahoma, where 2 new oil rigs started drilling at the same time, leaving the Cana Woodford with one natural gas rig and 45 drilling for oil...finally, the last natural gas rig that was shut down came out of a basin not tracked separately by Baker Hughes, which could have been anywhere, but which most likely seems to have been pulled out of Oklahoma, given an otherwise unexplained two rig decrease in the state outside of the Cana Woodford...

DUC well report for July

Monday of this past week saw the release of the EIA's Drilling Productivity Report for August, which includes the EIA's July data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the fifth month in a row, this report showed a decrease in uncompleted wells nationally in July, as drilling of new wells decreased and completions of drilled wells increased slightly....while there continued to be an increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of western Texas and New Mexico, the other regions all saw decreases in their DUC inventory, more than offsetting the Permian increases...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 100 wells, the largest decrease in 33 months, from a revised 8,208 DUC wells in June to 8,108 DUC wells in July, which still represents a 14.0% increase from the 7,114 wells that had been drilled but remained uncompleted as of the end of July a year ago...the decrease occurred as 1,311 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during July, down by 31 from the 1,342 wells drilled in June and the lowest in 15 months, while 1,411 wells were completed and brought into production by fracking, an increase of 19 well completions from the 1,392 completions seen in June and a 54 month high for fracking...at the July completion rate, the 8,108 drilled but uncompleted wells left at the end of the month represent a 5.7 month backlog of wells that have been drilled but are not yet fracked, down from a 6.0 month backlog a year ago...  

both oil producing regions and natural gas producing regions saw DUC well decreases in July, with only the predominantly oil Permian showing an increase...the number of DUC wells left in the Oklahoma Anadarko decreased by 32, from 936 at ​the end of June to 904 DUC wells ​at ​the end of July, as 124 wells were drilled into the Anadarko basin during July while 156 Anadarko wells were being fracked....at the same time, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 23 to 422, as 178 Niobrara wells were drilled in July while 201 Niobrara wells were completed....meanwhile, DUC wells in the Bakken of North Dakota fell by 18, from 693 DUC wells at ​the end of June to 675 DUCs at ​the end of July, as 106 wells were drilled into the Bakken in July, while 124 of the drilled wells in that basin were being fracked...in addtion, DUC wells in the Eagle Ford of south Texas decreased by 13, from 1,517 DUC wells at ​the end of June to 1,504 DUCs at ​the end of July, as 190 wells were drilled in the Eagle Ford during June, while 203 already drilled Eagle Ford wells were completed..

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 16 wells, from 438 DUCs at ​the end of June to 422 DUCs at ​the end of July, as 123 wells were drilled into the Marcellus and Utica shales during the month, while 139 of the already drilled wells in the region were fracked...in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory decrease by 7 wells to 182, as 46 wells were drilled into the Haynesville during July, while 53 Haynesville wells were fracked during the same period....

on the other hand, the Permian basin of west Texas and New Mexico saw its total count of uncompleted wells rise by 9, from 3,990 DUC wells at ​the end of June to 3,999 DUCs at ​the end of July, as 544 new wells were drilled into the Permian, but only 535 wells in the region were fracked.......thus, for the month of July, DUCs in the five oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 77 wells to 7,504 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 23 wells to 604 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both...

+

+

Note: there's more here...

Sunday, August 11, 2019

oil prices fall into bear market; natural gas prices bounce off a 39 month low; rig count falls to a 19 month low..

oil prices fell nearly 8% to a 7 month low on a worsening of the US-China trade war early this past week, but then recovered three-quarters of that decline by week end on reports that the Saudis were on the phone with the Russians in an attempt to stop the price slide...after ending 1% lower at $55.66 a barrel last week on the Thursday Trump tweet announcing new tariffs on China, the contract price of US crude for September delivery opened trading lower on Monday as China had let its currency depreciate to 7 yuan to the dollar in response to Trump's tariffs, but its losses were limited by a draw from inventories at the Cushing, Oklahoma delivery hub for that contract, as US prices ended down just 93 cents at $54.69 a barrel even as global oil prices fell more than $2 on the currency war news...oil prices fell sharply for second day on Tuesday, tracking a volatile stock market, with US crude ending down $1.06 at $53.63 a barrel, even as Brent crude, the global benchmark, slid into a bear-market in falling more than 20% from its late-April peak...oil prices then plunged further on Wednesday after the EIA reported a surprise increase in US crude and gasoline supplies, with US crude ending down nearly 5% at $51.09 a barrel, while Brent crude fell $2.71 to $56.23 a barrel, an eight-month low....however, oil prices jumped on Thursday due to a firmer yuan and expectations of more OPEC cuts, with US crude ending 2.5% higher at $52.54 a barrel on reports that the Saudis phoned other oil producers to devise a policy response to halt the price slide...prices jumped again on Friday, supported by a drop in European oil inventories and expectations of more OPEC output cuts, despite an International Energy Agency report that demand growth was at its lowest since 2008, with US crude finishing the session $1.96, or 3.7% higher at $54.50 a barrel, the largest one-day gain in nearly a month...but despite that 2 session surge, US WTI prices still ended the week down 2% from last week's close, while Brent crude finished 5.4% lower at $58.53, with both benchmarks having entered a bear market earlier in the week...

natural gas prices, meanwhile, ended the week little changed, after falling to a 39 month low on Monday...after falling for a third week in a row and hitting 38 month lows twice last week before ending at $2.121 per mmBTU, the natural gas contract for September delivery fell 5.1 cents to a 39 month low of $2.070 per mmBTU on Monday, following a weekend report that US dry gas production had hit an all-time high of 90.4 billion cubic feet per day, thus topping 90 billion cubic feet per day for the first time in US history...prices rebounded 4.1 cents on Tuesday on strong power burns and a forecast for hotter than normal weather for the next 15 days, but backed off from that bullish news and still fell 2.8 cents on Wednesday...a slightly smaller than expected addition to storage moved prices 4.5 cent higher on Thursday, but they again fell back to a intraday low of $2.064 per mmBTU on Friday before ending the week at $2.119 per mmBTU, just two-tenths of a cent lower than the previous week's close...

the natural gas storage report for the week ending August 2nd from the EIA indicated that the quantity of natural gas held in storage in the US increased by 55 billion cubic feet to 2,689 billion cubic feet by the end of the week, which meant our gas supplies were 343 billion cubic feet, or 14.6% more than the 2,346 billion cubic feet that were in storage on August 2nd of last year, while still 111 billion cubic feet, or 4.0% below the five-year average of 2,800 billion cubic feet of natural gas that have been in storage as of the 2nd of August in recent years....this week's 55 billion cubic feet injection into US natural gas storage was a bit below the consensus forecast of a 57 billion cubic feet injection by analysts surveyed by S&P Global Platts , while it was well above the average 43 billion cubic feet of natural gas that have been added to gas storage during the same week of the summer over the past 5 years, the 19th such above average storage build in the last 21 weeks... the 1,511 billion cubic feet of natural gas that have been added to storage over the 19 weeks of this injection season remains as the largest injection of gas into storage on record for any prior similar period of the gas injection season...   

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending August 2nd indicated the first increase in US crude inventories in 8 weeks, despite a big jump in our refinery throughput, because of an increase in our crude oil imports and a drop in our oil exports, accompanied a major shift of unaccounted for crude from the demand side to the supply side of the oil balance sheet....our imports of crude oil rose by an average of 485,000 barrels per day to an average of 7,148,000 barrels per day, after falling by an average of 365,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 709,000 barrels per day to an average of 1,865,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,283,000 barrels of per day during the week ending August 2nd, 1,194,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, the production of crude oil from US wells was reported to be 100,000 barrels per day higher than the prior week at 12,300,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 17,583,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly using 17,777,000 barrels of crude per day during the week ending August 2nd, 786,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 341,000 barrels of oil per day were being added to the supplies of oil stored in the US....hence, 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 535,000 barrels per day less than what what was added to storage and what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+535,000) 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"....since last week's unaccounted for crude was on the demand side at -512,000, that means there was a week over week swing of 1,047,000 barrels per day in the unaccounted for portion of the oil balance sheet, ​or that this week's week over week comparisons ​were distorted by more than a million barrels of missing crude per day (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) indicated that the 4 week average of our oil imports fell to an average of 6,918,000 barrels per day last week, which was 14.9% less than the 8,129,000 barrel per day average that we were importing over the same four-week period last year...the 341,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day higher at 12,300,000 barrels per day even though the rounded estimate of the output from wells in the lower 48 states was unchanged at 11,800,000 barrels per day because a 9,000 barrels per day increase to 453,000 barrels per day in Alaska's oil production raised the final rounded national production total by 100,000 barrels per day (EIA"s math, not mine)...last year's US crude oil production for the week ending August 3rd was rounded to 10,800,000 barrels per day, so this reporting week's rounded oil production figure was 13.9% above that of a year ago, and 45.9% 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 96.4% of their capacity in using 17,777,000 barrels of crude per day during the week ending August 2nd, up from 93.0% of capacity the prior week, a refinery utilization rate that has been​ fairly​ typical for mid summer in recent years....the 17,777,000 barrels per day of oil that were refined this week were 1.0% above the 17,598,000 barrels of crude per day that were being processed during the week ending August 3rd, 2018, when US refineries were operating at 96.6% of capacity....

even with the big increase in the amount of oil being refined, gasoline output from our refineries was ​only a bit higher, increasing by 5,000 barrels per day to 10,421,000 barrels per day during the week ending August 2nd, after our refineries' gasoline output had increased by 327,000 barrels per day the prior week....even so, this week's gasoline production was 5.1% higher than the 9,913,000 barrels of gasoline that were being produced daily during the same week last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 122,000 barrels per day to 5,286,000 barrels per day, after our distillates output had decreased by 55,000 barrels per day the prior week....​with this week's increase, our distillates production was 0.9% more than the 5,237,000 barrels of distillates per day that were being produced during the week ending August 3rd, 2018.... 

with our gasoline production little changed, our supply of gasoline in storage at the end of the week rose for the second time in 8 weeks and for the 6th time in twenty-four weeks, rising by 4,437,000 barrels to 235,172,000 barrels over the week to August 2nd, after our gasoline supplies had fallen by 1,791,000 barrels over the prior week....our gasoline supplies increased this week as our imports of gasoline rose by 100,000 barrels per day to 1,217,000 barrels per day while our exports of gasoline fell by 32,000 barrels per day to 777,000 barrels per day, and while the amount of gasoline supplied to US markets increased by 92,000 barrels per day to 9,651,000 barrels per day...after this week's increase, our gasoline supplies were fractionally higher than last August 3rd's inventory level of 233,868,000 barrels, and have now risen to roughly 4% above the five year average of our gasoline supplies at this time of the year...

with the increase in our distillates production, our supplies of distillate fuels rose for the 9th time in the past 21 weeks, increasing by 1,529,000 barrels to 137,451,000 barrels during the week ending August 2nd, after our distillates supplies had decreased by 894,000 barrels over the prior week...our distillates supplies increased this week because our imports of distillates jumped by 150,000 barrels per day to 253,000 barrels per day while our exports of distillates fell by 75,000 barrels per day to 1,435,000 barrels per day, and while the amount of distillates supplied to US markets, a proxy for our domestic demand, increased by 1,000 barrels per day to 3,886,000 barrels per day....after this week's inventory increase, our distillate supplies were 9.6% higher than the 125,423,000 barrels of distillates that we had stored on August 3rd, 2018, but still around 1% below the five year average of distillates stocks for this time of the year...

finally, with higher oil imports and much lower oil exports, our commercial supplies of crude oil in storage rose for the first time in eight weeks but for the sixteenth time in 29 weeks, increasing by 2,385,000 barrels, from 436,545,000 barrels on July 26th to 438,930,000 barrels on August 2nd ...after that increase, our crude oil inventories were roughly 2% above the five-year average of crude oil supplies for this time of year, and were 31.0% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the 1st Friday of August, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories had generally been rising since this past Fall up until the recent 8 weeks, after generally falling until then through most of the prior year and a half, our oil supplies as of August 2nd were still 7.7% above the 407,389,000 barrels of oil we had stored on August 3rd of 2018, but at the same time were 7.7% below the 475,437,000 barrels of oil that we had in storage on August 4th of 2017, and 11.0% below the 492,969,000 barrels of oil we had in commercial storage on August 5th of 2016... 

This Week's Rig Count

the US rig count fell for the 22nd time in 25 weeks during the week ending August 9th, and is now down by 13.8% year to date....Baker Hughes reported that the total count of rotary rigs running in the US fell by 8 rigs to a new 19 month low of 934 rigs this past week, down by 123 rigs from the 1057 rigs that were in use as of the August 10th report of 2018, and less than half of the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil fell by 6 rigs to 764 rigs this week, which was an 18 month low for oil rigs, 105 fewer than were running a year ago, and quite a bit below 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 2 rigs to 169 natural gas rigs, which was down by 17 rigs from the 186 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 August 29th, 2008...in addition, a rig classified as miscellaneous continued to drill this week, which was one less than the 2 "miscellaneous" rigs drilling a year ago...

the rig count in the Gulf of Mexico was up by 1 to 23 rigs this week, as another Gulf rig began operating off the shore of Louisiana...that brought the offshore Louisiana count up to 23, making for an increase of 5 Gulf of Mexico rigs from the 18 rigs that were deployed in the Gulf in the same week a year ago, when 16 rigs were drilling in Louisiana waters and two were deployed offshore from Texas...in addition, there continues to be two rigs deployed off the coast of Alaska this week, same number as were drilling off the Alaskan shore a year ago, for a total US offshore rig count of 25, up from the total of 20 offshore rigs that were deployed a year ago..

the count of active horizontal drilling rigs was down by 2 to 817 horizontal rigs this week, which was the least horizontal rigs deployed since February 2nd, 2018 and hence also a new 18 month low for horizontal drilling...it was also 107 fewer horizontal rigs than the 924 horizontal rigs that were in use in the US on August 10th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the directional rig count was also down by 2 to 65 directional rigs this week, but those were up from the 6​4 directional rigs that were operating during the same week of last year... at the same time, the vertical rig count was down by 4 to 52 vertical rigs this week, and that was down by 17 from the 69 vertical rigs that were in use on August 10th of 2018...

the details on this week's changes in drilling activity by state and by ​major ​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 oil & gas producing states, and the second table 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 August 9th, the second column shows the change in the number of working rigs between last week's count (August 2nd) and this week's (August 9th) count, the third column shows last week's August 2nd active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent 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 August, 2018...     

August 9 2019 rig count summary

once again, the most significant changes in drilling activity were outside of Texas, with the 4 rigs that were pulled out of Alaska not even showing up on the major US basin table above...in Oklahoma, the 3 rigs that were shut down in the Cana Woodford were apparently offset by a rig increase in the Granite Wash near the Texas panhandle, since Texas Oil District 10, where the Granite Wash stretches into Texas, only added one rig...the 2 rig decrease in the Haynesville also appears to have been split between states, as northern Louisiana only saw one rig pulled out, while Texas Oil District 6, which includes the western reaches of the Haynesville, also saw one rig shut down this week...however, there were no rig changes in the Texas Permian, so both of the rigs added in that basin were added in New Mexico, in the western-most reaches of the Permian Delaware...while the 2 rig decrease in the Haynesville ​appears to adequately explain the national natural gas rig count decrease, one of the rigs added in the Granite Wash happened to be targeting natural gas, while a natural gas rig in an 'other' not tracked separately by Baker Hughes was concurrently shut down...

+

+

note: there's more here...

Sunday, August 4, 2019

oil prices see largest one-day loss in 53 months; natural gas prices fall to 38 month low; oil supplies lowest in 38 weeks

oil prices finished the week lower despite being up 4 out of 5 days, as Trump's surprise Thursday tweet of new tariffs on China shook financial markets and sent crude tumbling to its largest single day loss in over 4 years....after rising less than 1% to $56.20 a barrel on a big US oil inventory withdrawal last week, prices of US crude for September delivery initially slipped lower on Monday after reports of 'constructive' talks with Iran, but turned higher as the prospect of an interest rate cut by the Fed overshadowed concerns about slower global economic growth, with prices finishing the session 67 cents higher at $56.87 a barrel...expectations of a Fed rate cut and a US crude supply drawdown pushed prices higher again on Tuesday, with the WTI contract for September delivery rising $1.18 to settle at $58.05 per barrel, with those gains extended in after hours after the API reported a larger-than-expected crude draw...hence, oil prices opened higher on Wednesday and moved even higher after the EIA confirmed the big draw of crude and lower supplies of gasoline and distillates, rising for the fifth consecutive day to $58.58 a barrel, as traders awaited the widely expected first cut in interest rates in more than 10 years...however, oil prices fell on Thursday morning after the Fed cut rates but signaled further rate cuts might be limited, and then nosedived by as much as 8% after Trump said he'd impose another 10% tariff on $300 billion more of Chinese imports, as US crude went on to end the day $4.63 lower at $53.95 a barrel, the largest single-day decline since February 2015...oil prices rebounded more than $1 from that oversold level early on Friday and continued higher to close up $1.71 at $55.66 per barrel, but still ended down 1% on the week that saw the U.S./China trade war overshadow both the Fed rate cut and a bullish inventory report...

natural gas prices also ended lower, falling for a third week in a row and ending the week below the multi-year low set in June...after falling 4% to a hair above a 3 year low at $2.169 per mmBTU last week, prices of natural gas for August delivery tumbled 2.8 cents to $2.141 on the final day of trading for the August natural gas contract on Monday, largely on a weekend trend toward cooler medium range weather forecasts; at the same time, the natural gas contract for September delivery fell 3.4 cents to $2.116 per mmBTU, a 38 month low...however, September gas rebounded 2.1 cents on Tuesday and then rose 9.6 cents to $2.233 per mmBTU on Wednesday, as the trend toward cooler weather lifted, while stronger power burns improved the fundamentals....however, a bearish storage report sent prices 3.1 cents lower on Thursday, and the week ended with another 8.1 cent selloff on Friday to send the September natural gas contract price back to $2.121 per mmBTU, just a half a cent above that 38 month low set Monday...

with natural gas prices still ending at their lowest weekly close in 38 months, we'll include a graph of natural gas prices over the past 3 1/2 years to show you how we got here...

August 3 2019 weekly natural gas prices

the above graph is a Saturday afternoon screenshot of the interactive US natural gas price graph at Daily FX, an online platform that provides trading news, charts, indicators and analysis of the markets...each bar on the above graph portion above represents natural gas prices for a week of trading between the start of 2016 and this past week, wherein the green bars represent the weeks when the price of natural gas went up, and red bars represent the weeks when the price of natural gas went down...for green bars, the starting natural gas price at the beginning of the week is at the bottom of the bar and the price at the end of the week is at the top of the bar, while for red or down weeks, the starting price is at the top of the bar and the price at the end of the week is at the bottom of the bar...also barely visible on this scaled-down "candlestick" style graph are the very faint grey "wicks" above and below each bar, to indicate trading prices during the week that were above or below the opening to closing price range for that week...(the lighter red & green bars at the bottom of the graph represent the trading volume for each week, not a concern for us today)...as you can see, natural gas prices have been falling steadily since approaching $5 per mmBTU in November, when it appeared that natural gas supplies might be inadequate for the coming winter, and have now been testing these 3 year lows for the past 6 weeks, and first established a new three year low in the middle of June...average breakeven prices for drilling new natural gas wells are now down to near $3, so a drilling slowdown is to be expected....when gas prices first fell below $2.50 in early 2016, drilling new wells for natural gas virtually dried up, with the national natural gas rig count falling to as low as 81 rigs the following summer, which was the lowest natural gas rig count over the entire time Baker Hughes had been keeping records... 

the natural gas storage report for the week ending July 26th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 65 billion cubic feet to 2,634 billion cubic feet by the end of the week, which meant our gas supplies were 334 billion cubic feet, or 13.2% greater than the 2,300 billion cubic feet that were in storage on July 26th of last year, while still 123 billion cubic feet, or 4.5% below the five-year average of 2,757 billion cubic feet of natural gas that have been in storage as of the 26th of July in recent years....this week's 65 billion cubic feet injection into US natural gas storage was quite a bit more than the consensus expectations of analysts surveyed by S&P Global Platts for a 53 billion cubic feet injection , and it was much ​above the average 36.6 billion cubic feet of natural gas that have been added to gas storage during the fourth week of July over the past 5 years, the 18th above average storage build in the last 20 weeks... the 1,456 billion cubic feet of natural gas that have been added to storage over the 18 weeks of this injection season has been the largest injection of gas into storage on record for any prior similar period of the gas injection season...  

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending July 26th, indicated the 10th decrease in crude inventories in 18 weeks, despite a ​big ​drop in our oil exports and a rebound in our crude oil production, ​which was ​man​i​fest as a major shift of unaccounted for crude from the supply side to the demand side of the oil balance sheet....our imports of crude oil fell by an average of 365,000 barrels per day to an average of 6,663,000 barrels per day, after rising by an average of 194,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 718,000 barrels per day to an average of 2,574,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,089,000 barrels of per day during the week ending July 26th, 353,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, the​ ​production of crude oil from US wells was reported to be 900,000 barrels per day higher ​than the prior week ​at 12,200,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,289,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly using 16,991,000 barrels of crude per day during the week ending July 26th, 43,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 1,213,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....hence, 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 512,000 barrels per day more than what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (-512,000) 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"....since last week's unaccounted for crude was on the supply side at +450, that means there was a week over week swing of 962,000 barrels per day in the unaccounted for portion of the ​oil ​balance sheet, rendering this week's week over week comparisons meaningless (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) indicated that the 4 week average of our oil imports fell to an average of 6,956,000 barrels per day last week, which was 13.1% less than the 8,004,000 barrel per day average that we were importing over the same four-week period last year...the 1,213,000 barrel per day decrease in our total crude inventories was all pulled out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 900,000 barrels per day higher at ​12,2​00,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states ​was ​1,000,000 barrels per day ​higher at 11,800,000 barrels per day, largely due to ​resumed production ​in the Gulf of Mexico, while a 14,000 barrels per day decrease to 444,000 barrels per day in Alaska's oil production lowered the final rounded national production total by 100,000 barrels per day (EIA"s math, not mine)...last year's US crude oil production for the week ending July 27th was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was 11.9% above that of a year ago, and 44.8% 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 93,0% of their capacity in using 16,991,000 barrels of crude per day during the week ending July 26th, down from 93.1% of capacity the prior week, a utilization ​rate that's a bit lower ​than normal for mid summer....the 16,991,000 barrels per day of oil that were refined this week were also 2.8% below the 17,480,000 barrels of crude per day that were being processed during the week ending July 27th, 2018, when US refineries were operating at 96.1% of capacity....

even with the small decrease in the amount of oil being refined, gasoline output from our refineries was quite a bit higher, increasing by 327,000 barrels per day to 10,416,000 barrels per day during the week ending July 26th, after our refineries' gasoline output had increased by 234,000 barrels per day the prior week....but even with those big increases in gasoline output, this week's gasoline production was still fractionally lower than the 10,483,000 barrels of gasoline that were being produced daily during the same week last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 55,000 barrels per day to 5,164,000 barrels per day, after our distillates output had decreased by 142,000 barrels per day the prior week....but even after those decreases, the week's distillates production was a bit more than the 5,159,000 barrels of distillates per day that were being produced during the week ending July 27th, 2018.... 

despite the increase in gasoline production, our supply of gasoline in storage at the end of the week still fell for the sixth time in 7 weeks and for the 18th time in twenty-three weeks, falling by 1,791,000 barrels to 230,735,000 barrels over the week to July 26th, after our gasoline supplies had slipped by 226,000 barrels over the prior week....our gasoline supplies decreased this week because our exports of gasoline rose by 251,000 barrels per day to 809,000 barrels per day, and while our imports of gasoline rose by 132,000 barrels per day to 1,117,000 barrels per day, and while the amount of gasoline supplied to US markets decreased by 114,000 barrels per day to 9,559,000 barrels per day...after our gasoline supplies had reached an all time record high twenty-five weeks ago, they then fell by nearly 13% over 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, and as a result they are still fractionally lower than last July 27th's inventory level of 230,968,000 barrels, while just 2% above the five year average of our gasoline supplies at this time of the year...

with the decrease in our distillates production, our supplies of distillate fuels fell for the 12th time in the past 20 weeks, decreasing by 894,000 barrels to 135,922,000 barrels during the week ending July 26th, after our distillates supplies had increased by 613,000 barrels over the prior week...our distillates supplies decreased this week because our exports of distillates rose by 538,000 barrels per day to 1,510,000 barrels per day while our imports of distillates fell by 2,000 barrels per day to 103,000 barrels per day, and while the amount of distillates supplied to US markets, a proxy for our domestic demand, decreased by 379,000 barrels per day to 3,885,000 barrels per day....but even after this week's inventory ​decrease, our distillate supplies were still 9.4% higher than the 124,193,000 barrels of distillates that we had stored on July 27th, 2018, but around 3% below the five year average of distillates stocks for this time of the year...

finally, even with our oil production returning to normal after tropical storm Barry and our oil exports falling, our commercial supplies of crude oil in storage fell for a seventh week in a row and for the thirteenth time in 28 weeks, decreasing by 8,496,000 barrels, from 445,041,000 barrels on July 19th to 436,545,000 barrels on July 26th...after that big decrease, our crude oil inventories slipped back to ​near ​the five-year average of crude oil supplies for this time of year, while remaining more than 30% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the 4th week of July, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories had generally been rising since this past Fall until the recent 7 weeks, after generally falling until then through most of the prior year and a half, our oil supplies as of July 26th were still 6.8% above the 408,740,000 barrels of oil we had stored on July 27th of 2018, but at the same time were 9.4% below the 481,888,000 barrels of oil that we had in storage on July 28th of 2017, and 11.3% below the 491,914,000 barrels of oil we had stored on July 29th of 2016...      

since it's probably been a half year that we've been explaining that this year's crude inventories are above last years but below the two years before that, it might be useful if we included a picture of that...so below we have a graph that shows total US crude oil inventories weekly since the beginning of 2016, oddly ​labeled​ as a fraction of a billion barrels....the graph below comes from the Zero Hedge summary of this week's Petroleum Status Report, but ignore the sidebar "M", as it should ​indicate billion​s​; everything else on the graph is accurate...as the red arrow that Zero Hedge includes indicates, our crude oil inventories are now at their lowest since November 2nd, 2018...

August 1 2019 crude inventories as of July 26th

This Week's Rig Count

the US rig count fell for the 21st time in 24 weeks during the week ending August 2nd, and is now down by more than 13% year to date....Baker Hughes reported that the total count of rotary rigs running in the US fell by 4 rigs to a new 18 month low of 944 rigs this past week, down by 102 rigs from the 1044 rigs that were in use as of the August 3rd report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil fell by 6 rigs to 770 rigs this week, which was also a 18 month low for oil rigs, 89 fewer than were running a year ago, and less than half 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 increased by 2 rigs to 171 natural gas rigs, which was ​still ​down by 12 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 August 29th, 2008...in addition, a rig classified as miscellaneous continued to drill this week, which was one ​less than the 2 "miscellaneous" rigs drilling a year ago...

the rig count in the Gulf of Mexico was down by 1 to 22 rigs this week, as the only rig which had been drilling offshore from Texas was shut down...that still left 22 rigs drilling offshore from Louisiana, an increase of 6 Gulf of Mexico rigs from the 16 rigs that were deployed in the Gulf in the same week a year ago, when 14 rigs were drilling in Louisiana waters and two were deployed offshore from Texas...in addition, there continues to be two rigs deployed off the coast of Alaska this week, up from the one rig drilling off the Alaskan shore a year ago...combining those, the total US offshore rig count is​ thus​ at 24, 7 more offshore rigs than were deployed a year ago..

the count of active horizontal drilling rigs was down by 4 to 819 horizontal rigs this week, which was the least horizontal rigs deployed since February 2nd, 2018 and hence also a new 18 month low for horizontal drilling...it was also 93 fewer horizontal rigs than the 912 horizontal rigs that were in use in the US on August 3rd of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the directional rig count was unchanged at 67 directional rigs this week, but those were ​more than the 64 directional rigs that were operating during the same week of last year... in addition, vertical rig count was also unchanged at 56 vertical rigs this week, but that was down by 12 from the 68 vertical rigs that were in use on August 3rd of 2018...

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 oil & gas producing states, and the second table 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 August 2nd, the second column shows the change in the number of working rigs between last week's count (July 26th) and this week's (August 2nd) count, the third column shows last week's July 26th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent 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 August, 2018...    

August 2 2019 rig count summary

as you can see, this week's drilling pullback was concentrated in Oklahoma, which was down 5 rigs, but it's not immediately obvious where those 5 rigs came from; obviously, the rig that was shut down in the Cana Woodford ha​d been drilling in Oklahoma, and it also appears that as many as 3 rigs could have been pulled out of the Granite Wash in Oklahoma, since Texas Oil District 10 in the panhandle ​region ​where the Granite Wash is located actually added a rig...but we still have to figure that at least 1 of the Oklahoma rig ​cutbacks came out of an area not included in the major Oklahoma basins ​listed ​by Baker Hughes...elsewhere in Texas, we have 2 rigs pulled out of Texas Oil District 8, or the core Permian Delaware, and a single rig pulled out of Texas Oil District 7C, or the southern Permian Midland basin, while Texas Oil District 8A, or the northern part of the Permian Midland, saw 4 additional rigs start up...hence, that means that the 2 rigs that were shut down in New Mexico had been drilling in the western Permian Delaware...the natural gas rig that was started up in the Haynesville also appears to have been added in Texas, since the rig count in northern Louisiana was unchanged while Texas Oil District 6, which includes the western reaches of the Haynesville, also saw a rig added this week...meanwhile, the other natural gas rig that was added this week was in a basin not tracked separately by Baker Hughes, as none of the other basins shown above had a change in their ​natural ​gas rig count this week..

+

+

Note: there's more here....

Sunday, July 28, 2019

natural gas prices testing a 3 year low; natural gas drilling activity at a 20 month low

oil prices eked out a small increase this past week, as ongoing oil tanker trouble in the Persian Gulf and a large US inventory withdrawal outweighed ​the impact of falling demand from ​a global economic slowdown.​..​ after falling 7% to $55.63 a barrel last week as Gulf of Mexico production returned and tensions between the US & Iran and the US showed signs of easing, prices of US crude for August delivery rose on Monday on concerns that Iran’s reciprocal seizure of a British tanker could lead to further supply disruptions in the Gulf, with trading in the August oil contract expiring 53 cents higher at $56.22 a barrel​,​ while at the same time the more-active September WTI oil contract price rose 46 cents to end the session at $56.22 a barrel...after opening lower, oil prices continued higher on Tuesday, as expectations of lower U.S. crude supplies were only partially offset by weaker demand forecasts and the full restart of Libya’s largest oil field, with the price of September oil ending 55 cents higher at $56.77 a barrel...oil prices spiked higher early Wednesday on the the American Petroleum Institute report of the largest oil inventory draw so far this year and extended those gains when the EIA confirmed the big crude draw and also reported lower crude production, with oil rising to as high as $57.64 a barrel before traders turned their attention back to concerns about weaker energy demand and quickly pushed oil prices more than 4% lower, before they recovered a bit to close down 89 cents at $55.88 a barrel...oil prices recovered a bit on on Thursday amid ongoing Middle East tensions, but a manufacturing slowdown indicated by purchasing managers reports from Europe & the US capped the gains and US crude finished up just 14 cents, or 0.3%, at $56.02 a barrel...oil prices continued modestly higher on Friday after a stronger-than-expected U.S. GDP report and concerns over the safety of Persian Gulf oil transport, and finished the session up 18 cents at $56.20 a barrel, with September oil thus ending the week with a gain of just under 1%..

natural gas prices, on the other hand, again trended lower, and ended the week just a fraction above the multi-year low seen in June...after falling more than 8% to $2.251 per mmBTU on the recovery of Gulf production last week, prices of natural gas for August delivery moved up 6.1 cents on Monday and closed with the​ir​ first increase in 6 sessions, as forecasts indicated above normal temperatures would become more widespread ​at the end of July and to start August...prices then slipped 1.2 cents on notably lower trading volume on Tuesday, and then fell 8 cent on Wednesday as traders positioned against a possible bearish storage report...when the storage report came in line with expectations, natural gas prices recovered 2.4 cents on Thursday, but they sold off again on Friday on a forecast of cooler weather and a dip in demand in the 11-15 day time frame and ended down 7.5 cents on the day at $2.169 per mmBTU, just a penny higher than the lowest front month quote of the last three years, and only three-tenths of a cent above the June 20th lowest closing quote for this August contract..

the natural gas storage report for the week ending July 19th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 36 billion cubic feet to 2,569 billion cubic feet by the end of the week, which meant our gas supplies were 300 billion cubic feet, or 13.2% greater than the 2,269 billion cubic feet that were in storage on July 19th of last year, while still 151 billion cubic feet, or 5.6% below the five-year average of 2,720 billion cubic feet of natural gas that have been in storage as of the 19th of July in recent years....this week's 36 billion cubic feet injection into US natural gas storage was in line with the consensus market expectation, but it was lower than the average 44 billion cubic feet of natural gas that have been added to gas storage during the third week of July in recent years, the second straight below average storage build, following 17 weeks of above seasonal stock changes.... nonetheless, the 1,391 billion cubic feet of natural gas that have been added to storage over the past 17 weeks has still been the largest injection of gas into storage on record for any prior similar period of the gas injection season...

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending July 19th, indicated that a jump in our oil exports and a drop in our crude oil production resulted in the the 9th withdrawal withdrawal of crude from our supplies in 17 weeks, in a week where the effects of tropical storm Barry on the oil data are still quite evident...our imports of crude oil rose by an average of 194,000 barrels per day to an average of 7,028,000 barrels per day, after falling by an average of 470,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 758,000 barrels per day to 3,292,000  barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,736,000 barrels of per day during the week ending July 19th, 562,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, storm impacted production of crude oil from US wells was reported to be 700,000 barrels per day lower at 11,300,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 15,036,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly using 17,034,000 barrels of crude per day during the week ending July 19th, 233,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 1,548,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....hence, 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 450,000 barrels per day short of what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+450,000) 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"....(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) indicated that the 4 week average of our oil imports rose to an average of 7,187,000 barrels per day last week, which was still 13.7% less than the 8,331,000 barrel per day average that we were importing over the same four-week period last year...the 1,548,000 barrel per day decrease in our total crude inventories was all pulled out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 700,000 barrels per day lower at 11,300,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 700,000 barrels per day lower at 10,800,000 barrels per day, largely due to shut-in wells in the Gulf of Mexico, while a 4,000 barrels per day increase to 459,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national production total...last year's US crude oil production for the week ending July 20th was rounded to 11,000,000 barrels per day, so this reporting week's rounded oil production figure was still 2.7% above that of a year ago, and 34.1% 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 93,1% of their capacity in using 17,034,000 barrels of crude per day during the week ending July 19th, down from 94.4% of capacity the prior week, a drop that can largely be attributed to hurricane Barry....the 17,034,000 barrels per day of oil that were refined this week were almost 1.5% below the 17,285,000 barrels of crude per day that were being processed during the week ending July 20th, 2018, when US refineries were operating at 93.8% of capacity....

even with the decrease in the amount of oil being refined, gasoline output from our refineries was still higher, increasing by 234,000 barrels per day to 10,089,000 barrels per day during the week ending July 19th, after our refineries' gasoline output had decreased by 563,000 barrels per day the prior week....but even with that increase in gasoline output, this week's gasoline production was​ still​ 1.6% less than the 10,255,000 barrels of gasoline that were being produced daily during the same week last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 142,000 barrels per day to 5,219,000 barrels per day, after our distillates output had increased by 3,000 barrels per day the prior week....but even after that decrease, the week's distillates production was 1.2% more than the 5,157,000 barrels of distillates per day that were being produced during the week ending July 20th, 2018.... 

​despite the increase in gasoline production, our supply of gasoline in storage at the end of the week still fell for the fifth time in 6 weeks and for the 17th time in twenty-two weeks, slipping by 226,000 barrels to 232,526,000 barrels over the week to July 19th, after our gasoline supplies had jumped by 3,565,000 barrels over the prior week....our gasoline supplies decreased this week because the amount of gasoline supplied to US markets increased by 459,000 barrels per day to 9,673,000 barrels per day, while our exports of gasoline fell by 59,000 barrels per day to 558,000 barrels per day, and while our imports of gasoline rose by 133,000 barrels per day to 985,000 barrels per day...after our gasoline supplies had reached an all time record high twenty-four weeks ago, they then fell by nearly 13% over 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, and ​as a result they are still fractionally lower than last July 20th's inventory level of 233,504,000 barrels, while just 2% above the five year average of our gasoline supplies at this time of the year...

even with the decrease in our distillates production, our supplies of distillate fuels rose for the 8th time in the past 19 weeks, increasing by 613,000 barrels to 136,816,000 barrels during the week ending July 19th, after our distillates supplies had increased by 5,686,000 barrels over the prior week...the increase in our distillates supplies was smaller this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, increased by 699,000 barrels per day to 4,264,000 barrels per day, while our exports of distillates fell by 144,000 barrels per day to 972,000 barrels per day and while our imports of distillates fell by 27,000 barrels per day to 105,000 barrels per day....after this week's inventory increase, our distillate supplies were 12.9% higher than the 121,210,000 barrels of distillates that we had stored on July 20th, 2018, and returned to near the five year average of distillates stocks for this time of the year...

finally, with ​our oil exports ​rising ​while our oil production​ was​ interrupted by tropical storm Barry, our commercial supplies of crude oil in storage fell for a sixth week in a row and for the twelfth time in 27 weeks, decreasing by 10,835,000 barrels, from 455,876,000 barrels on July 12th to 445,041,000 barrels on July 19th ...but even with that big decrease, our crude oil inventories remained roughly 2% above the recent five-year average of crude oil supplies for this time of year, and roughly 33% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the 3rd week of July, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories had generally been rising since this past Fall until the recent 6 weeks, after generally falling until then through most of the prior year and a half, our oil supplies as of July 19th were still 9.9% above the 404,937,000 barrels of oil we had stored on July 20th of 2018, but at the same time were 7.9% below the 483,415,000 barrels of oil that we had in storage on July 21st of 2017, and 9.3% below the 490,501,000 barrels of oil we had stored on July 22nd of 2016...     

This Week's Rig Count

the US rig count fell for the 20th time in 23 weeks during the week ending July 26th, and is now down by nearly 13% for this year so far....Baker Hughes reported that the total count of rotary rigs running in the US fell by 8 rigs to a new 17 month low of 946 rigs this past week, down by 102 rigs from the 1048 rigs that were in use as of the July 27th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil fell by 3 rigs to 776 rigs this week, which was also a 17 month low for oil rigs, 85 fewer than were running a year ago, and less than half 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 5 rigs to 169 natural gas rigs, which was a twenty month low for natural gas rigs, down by 17 rigs from the 186 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 August 29th, 2008...in addition, a rig classified as miscellaneous continued to drill this week, matching the "miscellaneous" rig count of a year ago...

the rig count in the Gulf of Mexico was down by 2 to 23 rigs this week, as two rigs that had been drilling off the coast of Louisiana were shut down...that still left 22 rigs drilling offshore from Louisiana and a single rig deployed offshore from Texas, an increase of 8 rigs from the 15 rigs that were deployed in the Gulf of Mexico in the same week a year ago, when 13 rigs were drilling in Louisiana waters and two were deployed offshore from Texas...however, another rig started drilling off the coast of Alaska this week, where there are now two rigs deployed, up from the one rig drilling off the Alaskan shore a year ago...​hence, the total US offshore rig count is ​now ​at 25, an increase of 9 offshore rigs from a year ago..

however, both of the rigs that had been drilling through inland bodies of water in southern Louisiana were shut down this week, leaving no such inland waters rigs active in the US this week, the first time in my memory that the US inland waters rig count has gone to zero; a year ago, there were two such inland waters rigs deployed..

the count of active horizontal drilling rigs was down by 6 to 823 horizontal rigs this week, which was the least horizontal rigs deployed since February 2nd, 2018 and hence also a new 17 month low for horizontal drilling...it was also 99 fewer horizontal rigs than the 922 horizontal rigs that were in use in the US on July 27th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was down by 2 rigs to 67 directional rigs this week, but those were up from the 64 directional rigs that were operating during the same week of last year... meanwhile, vertical rig count was unchanged at 56 vertical rigs this week, but that was down by 6 from the 62 vertical rigs that were in use on July 27th of 2018...

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 oil & gas producing states, and the second table 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 July 26th, the second column shows the change in the number of working rigs between last week's count (July 19th) and this week's (July 26th) count, the third column shows last week's July 19th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent 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 27th of July, 2018...    

July 26 2019 rig count summary

in contrast to the recent weeks where most of the variances have been in the Texas Permian, there were quite a few unusual changes ​elsewhere ​this week...as you can see, the entirety of this week's national rig count drop could be accounted for by the 8 oil rigs that were pulled out of the Bakken shale in North Dakota's Williston basin, the largest such drop in the Bakken since February 2015...​in addition, we've already accounted for the 4 rig decrease shown for Louisiana, with the ​2 ​offshore and ​2 ​inland waters rigs from that state that were shut down...on the other hand, Wyoming saw an addition of 4 rigs, including 1 in the Denver-Julesburg Niobrara chalk and three in other basins not shown above, the largest jump in the Wyoming ​rig ​count yet this year....also note that the Permian basin saw a three rig increase while the Texas ​rig ​count showed no change; that was as one rig was pulled out of Texas Oil District 8, or the core Permian Delaware, while single rigs were started up in Texas Oil District 7C, or the southern Permian Midland basin, and in Texas Oil District 8A, or the northern part of the Permian Midland...hence, that means the other two Permian rigs were added in New Mexico, in the western Permian Delaware...

for rigs targeting natural gas, two rigs were shut down in Ohio's Utica shale, two were shut down in the West Virginia Marcellus, and two were shut down in basins not itemized separately by Baker Hughes, while a natural gas rig was started up in Oklahoma's Arkoma Woodford...you might note that West Virginia's rig count is only down by 1; that's because a conventional rig began drilling in Monroe count​y​, W Va,​ targeting natural gas at a depth of less than 5,000 feet; across most of West Virginia, the Marcellus lies more than 15,000 feet below the surface..

also note that in addition to the changes in the major producing states shown above, the only rig that had been drilling in Alabama was also shut down this week, the first time since April ​that ​Alabama has had no drilling activity, and down from 1 rig a year ago; at the same time, a sixth rig began drilling in Mississippi this week, the first time this year that Mississippi had that many rigs deployed; a year ago, there were three rigs drilling in Mississippi...

+

+

Note: there's more here...