Masters Of War

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

Sunday, January 10, 2021

gasoline demand at a 32 week low, gasoline supplies up ​most in 3​5 weeks; distillate​s​ supplies​ up most in 31 weeks​

oil exports at a forty-one week high & refinery utilization ​at a 19 week high led to largest drop in crude supplies since August; gasoline production fell ​by ​the most since March to a 7 month low, but gasoline demand at a 32 week low meant gasoline supplies jumped by ​the ​most in 3​5 weeks; distillate​s​ demand at a 15 week low​ led to largest increase in distillate​s​ supplies​ in 31 weeks​

oil prices rose for the ninth time out of the past ten weeks this week, after the Saudis unilaterally cut their oil output...after inching up 0.6% to $48.52 a barrel last week on a weaker dollar and on Trump's signing of the Covid stimulus bill, the contract price of US light sweet crude for February delivery opened lower on Monday as OPEC delayed their decision on extending their output cuts into February, and fell throughout the trading session to settle 90 cents lower at $47.62 per barrel as U.S. stocks fell 2% on concerns over the outcome of runoff Senate elections in Georgia....oil prices were lower again early Tuesday before OPEC+ resumed their meeting on February​'s oil​ output levels, but then jumped nearly 5% after news that Saudi Arabia would make​ large​ voluntary cuts to their oil output to finish $2.31 higher at $49.93 per barrel, as Mideast tensions rose after Iran seized a South Korean-flagged oil tanker in the Strait of Hormuz...oil prices were ​most​ly mixed early Wednesday after the American Petroleum Institute had reported a modest crude draw but large fuel inventory increases but then resumed their climb after the EIA reported the largest withdrawal from crude inventory since August before closing 70 cents higher at $50.63 per barrel...oil prices remained steady on Thursday even after Trump mobs stormed the U.S. Capitol, as oil traders focused on the likelihood of tighter supplies after Saudi Arabia had unilaterally agreed to cut output, and settled 20 cents higher at $50.83 per barrel as demand fears, slow vaccine rollouts, and the US political uncertainty took some wind out of the oil rally's sails...but the oil rally resumed Friday as traders focused on the Democratic victories in the Georgia elections that would boost the likelihood of a larger government stimulus, a​nd US crude prices settled $1.41, or 2.8%, higher at $52.24 a barrel, thus finishing the week with a 7.7% increase and at the highest price level since February of last year..

natural gas prices also moved higher this week on forecasts for colder weather and greater heating demand later in the month...after rising 1% to $2.539 per mmBTU last week in volatile trading on equally volatile swings in the weather outlook, the contract price of natural gas for February delivery opened 4% higher on Monday, on strong LNG exports, flat production, and an improved outlook for weather-driven demand, but drifted lower to settle with a 4.2 cent increase at $2.581 per mmBTU...February gas prices extended th​at increase on Tuesday, however, rising 12.1 cents to $2.702 per mmBTU, as weather models pointed to fresh bouts of cold air over the Midwest and East in the second half of January, and then added 1.4 cents ​to that gain ​on Wednesday on continued strength in LNG exports...natural gas prices inched up another 1.3 cents on Thursday after the EIA reported a withdrawal from gas inventories that was well above normal but below expectations, but pulled back 2.9 cents to finished the week with a 6.3% gain at $2.700 per mmBTU on a shift in weather forecasts that pointed to a potential delay in the onset of widespread freezing temperatures from early in the third full week of January to later in the month...

the natural gas storage report from the EIA for the week ending January 1st indicated that the quantity of natural gas held in underground storage in the US decreased by 130 billion cubic feet to 3,330 billion cubic feet by the end of the week, which left our gas supplies 138 billion cubic feet, or 4.2% higher than the 3,192 billion cubic feet that were in storage on January 1st of last year, and 201 billion cubic feet, or 6.4% above the five-year average of 3,129 billion cubic feet of natural gas that have been in storage as of the 1st of January in recent years....the 130 billion cubic feet that were drawn out of US natural gas storage this week was less than the average forecast of a 139 billion cubic foot withdrawal from an S&P Global Platts survey of analysts, but it was higher than the average withdrawal of 115 billion cubic feet of natural gas that have typically been pulled out of natural gas storage during the same week over the past 5 years, and much more than the 48 billion cubic feet withdrawal from natural gas storage seen during the corresponding warmer week ​ending January 3rd, 2020.... 

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending January 1st indicated that with our supply of and demand for oil little changed from the prior week, we had to withdraw oil from our stored commercial supplies for the 6th time in the past seven weeks and for the 18th time in the past twenty-four weeks...our imports of crude oil rose by an average of 43,000 barrels per day to an average of 5,369,000 barrels per day, after falling by an average of 238,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 7,000 barrels per day to a forty-one week high of 3,632,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 1,737,000 barrels of per day during the week ending January 1st, 36,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly unchanged at 11,000,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 12,737,000 barrels per day during this reporting week... 

meanwhile, US oil refineries reported they were processing 14,376,000 barrels of crude per day during the week ending January 1st, 89,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a net of 1,144,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US....so based on that reported & estimated data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was 495,000 barrels per day less than what our oil refineries reported they used during the week...to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+495,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the average daily supply of oil and the data for the average daily consumption of it balance out, essentially a balance sheet fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting that there must have been an error or errors of that magnitude in the oil supply & demand figures that we have just transcribed....however, since most everyone treats these weekly EIA figures as gospel and since these numbers often drive oil pricing and hence decisions to drill or complete wells, we'll continue to report them as they're published, just as they're watched & believed to be accurate by most everyone in the industry....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 5,421,000 barrels per day last week, which was 18.1% less than the 6,617,000 barrel per day average that we were importing over the same four-week period last year.....the 1,144,000 barrel per day net withdrawal from our crude inventories was due to a 1,144,000 barrels per day withdrawal from our commercially available stocks of crude oil, while the oil supplies in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported to be unchanged at 11,000,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 10,500,000 barrels per day, while a 1,000 barrel per day decrease to 514,000 barrels per day in Alaska's oil production had no impact on the rounded national total...last year's US crude oil production for the week ending January 3rd was rounded to 12,900,000 barrels per day, so this reporting week's rounded oil production figure was 14.7% below that of a year ago, yet still 30.5% 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 80.7% of their capacity while using those 14,376,000 barrels of crude per day during the week ending January 1st, up from 79.4% of capacity during the prior week, and the highest refinery utilization rate since ​August....however, since refinery utilization ​averaged the lowest on record through 2020, the 14,376,000 barrels per day of oil that were refined this week were still 14.9% fewer barrels than the 16,897,000 barrels of crude that were being processed daily during the week ending January 3rd of last year, when US refineries were operating at 93.0% of capacity...

despite the increase in the amount of oil being refined, gasoline output from our refineries was lower for the 5th time in seven weeks, decreasing by 1,181,000 barrels per day to a seven month low of 8,010,000 barrels per day during the week ending January 1st, after our gasoline output had increased by 362,000 barrels per day over the prior week...and since our gasoline production was just beginning to recover from a multi-year low in the wake of this Spring's covid lockdowns, that drop meant that this week's gasoline output was 9.9% less than the 8,887,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 146,000 barrels per day to 4,785,000 barrels per day, after our distillates output had increased by 49,000 barrels per day over the prior week....but since it's also just coming off a three year low, our distillates' production was also 9.9% less than the 5,311,000 barrels of distillates per day that were being produced during the week ending January 3rd, 2019...

even with the big drop in our gasoline production, our supply of gasoline in storage at the end of the week increased for the sixth time in eight weeks, for 11th time in 27 weeks, and by the most since the last week of April, rising by 4,519,000 barrels to 241,081,000 barrels during the week ending January 1st, after our gasoline inventories had decreased by 1,192,000 barrels over the prior week...our gasoline supplies increased this week because the amount of gasoline supplied to US users decreased by 687,000 barrels per day to a 32 week low of 7,441,000 barrels per day, and because our exports of gasoline fell by 28,000 barrels per day to 883,000 barrels per day, while our imports of gasoline fell by 156,000 barrels per day to 445,000 barrels per day....but even after this week's increase, our gasoline supplies were 4.2% lower than last January 3rd's gasoline inventories of 251,609,000 barrels, and near the five year average of our gasoline supplies for this time of the year... 

meanwhile, with the increase in our distillates production, our supplies of distillate fuels increased for the 5th time in 6 weeks, for the 22nd time in the past year, and by the most since May 29th, rising by 6,390,000 barrels to 152,029,000 barrels during the week ending January 1st, after our distillates supplies had increased by 3,095,000 barrels during the prior week....our distillates supplies rose by more this week than last because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 653,000 barrels per day to a 15 week low of 2,941,000 barrels per day,​ even as our imports of distillates fell by 317,000 barrels per day to 302,000 barrels per day​ and as​ our exports of distillates rose by 10,000 barrels per day to 1,232,000 barrels per day....after this week's inventory increase, our distillate supplies at the end of the week were 13.9% above the 139,050,000 barrels of distillates that we had in storage on January 3rd, 2019, and about 4% above the five year average of distillates stocks for this time of the year...

finally, with the decrease in our oil imports and the increase in our oil exports, our commercial supplies of crude oil in storage (not including the commercial oil being stored in the SPR) fell for the 19th time in the past thirty weeks but for just the 23rd time in the past year, decreasing by 8,010,000 barrels, from 493,469,000 barrels on December 25th to 485,459,000 barrels on January 1st....but even after that big decrease, our commercial crude oil inventories were still about 9% above the five-year average of crude oil supplies for this time of year, and about 48% above the prior 5 year (2011 - 2015) average of our crude oil stocks as of the first weekend of January, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories had generally been rising over the past two years, except for this autumn and during the past two summers, after generally falling over the year and a half prior to September of 2018, our commercial crude oil supplies as of January 1st were still 12.6% above the 431,060,000 barrels of oil we had in commercial storage on January 3rd of 2020, and also 10.4% more than the 439,738,000 barrels of oil that we had in storage on January 4th of 2019, and 15.7% above the 419,515,000 barrels of oil we had in commercial storage on January 5th of 2018...     

This Week's Rig Count

note: last week's rig count was released on Wednesday, December 30th, ahead of the New Year's weekend, so this week's rig count covers 9 days...that said, the US rig count rose for the 16th time in the past seventeen weeks during the period ending January 8th, but for just the 18th time in the past 43 weeks, and hence it is still down by 54.6% over that forty-three week period....Baker Hughes reported that the total count of rotary rigs running in the US rose by 9 to 360 rigs this past week, which was still down by 421 rigs from the 781 rigs that were in use as of the January 10th report of 2020, and was also still 44 fewer rigs than the all time low rig count prior to 2020, and 1,569 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in their first attempt to put US shale out of business....

The number of rigs drilling for oil increased by 8 rigs to 275 oil rigs this week, after rising by 3 oil rigs the prior week, leaving us with 384 fewer oil rigs than were running a year ago, and still less than a fifth of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations was up by 1 to 84 natural gas rigs, which was still down by 35 natural gas rigs from the 119 natural gas rigs that were drilling a year ago, and just 5.2% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil or gas, one rig classified as 'miscellaneous' continue to drill in Lake County, California this week, while a year ago there were three such "miscellaneous" rigs deployed...

The Gulf of Mexico rig count remained unchanged at 17 rigs this week, with 14 of those rigs drilling for oil in Louisiana's offshore waters and three drilling for oil offshore from Texas...that was 4 fewer Gulf rigs than the 21 rigs drilling in the Gulf a year ago, when 19 Gulf rigs were drilling for oil offshore from Louisiana, one rig was drilling for natural gas in the Mississippi Canyon offshore from Louisiana, and one rig was drilling for oil offshore from Texas...since there are no rigs operating off of other US shores at this time, nor were there a year ago, this week's national offshore rig figures are equal to the Gulf rig counts....however, in addition to those rigs offshore, two rigs continue to drill through inland bodies of water this week, one in St Mary parish in southern Louisiana and the other in Chambers County, Texas, just east of Houston, while a year ago there was just one rig drilling on US inland waters..

The count of active horizontal drilling rigs was up by 7 to 320 horizontal rigs this week, which was still 378 fewer horizontal rigs than the 698 horizontal rigs that were in use in the US on January 10th of last year, and less than a quarter of the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was up by 1 to 22 directional rigs this week, but those were still down by 23 from the 45 directional rigs that were operating during the same week a year ago....in addition, the vertical rig count was up by one to 18 vertical rigs this week, and those were also still down by 20 from the 38 vertical rigs that were in use on January 10th of 2020....

The details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of January 8th, the second column shows the change in the number of working rigs between last week's count (December 30th) and this week's (January 8th) count, the third column shows last week's December 30th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running during the count before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the​ 10th of January, 2020..    

January 8 2021 rig count summary

as you can see, there were more changes in drilling activity this week than recently, with two basins showing 4 rig increases...checking for the details on the Permian in Texas from the Rigs by State file at Baker Hughes, we find that there were no changes in any Permian Texas Oil District, which thus means that the 4 rigs that were added in New Mexico must have been added in the far west reaches of the Permian Delaware to account for the national Permian basin rig increase... since the rig count in all other Texas oil districts also remained unchanged, that means that the rig that was pulled out of the panhandle region Granite Wash basin came out of Oklahoma, which had a rig added in the Cana Woodford and in some other ​oil ​basin that Baker Hughes doesn't aggregate at the same time...for natural gas seeking rigs, we had two rigs pulled out of the Utica shale, one from Ohio and one from Pennsylvania, while four rigs were added in the Marcellus, three in Pennsylvania and one in West Virginia...at the same time, a natural gas rig was pulled out of the Haynesville shale in DeSoto Parish, Louisiana, while an oil rig began drilling in nearby at the same time, in the first Haynesville shale oil drilling since November 2019...

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note: there's more here

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