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, October 10, 2021

oil price is highest since 2014; natural gas price fell from 12 year high after largest inventory increase in 16 months; gasoline exports at a 26 month low…

Oil prices finished higher for the 7th straight week after OPEC decided to only add the minimum to global supplies in the coming months....after rising 2.6% to $75.88 a barrel last week as rising global demand amid tight supplies more than offset higher US inventories, the contract price for US light sweet crude for November delivery jumped early on Monday after reports emerged that the Joint Ministerial Monitoring Committee of the OPEC+ alliance had recommended that oil producers stick to their current plan and ease their cuts by just 400,000 barrels per day, and then rocketed to a 7 year high after OPEC and other producers doubled down on their earlier plans to increase oil output at a gradual rate, before settling $1.74 higher at $77.62 a barrel, still the highest closing price since 2014...the oil price rally on the OPEC decision continued on Tuesday, with the November contract price rising another $1.31 to another 7 year high at $78.93 a barrel, with crude prices also supported by a Goldman forecast that power generation could add an extra 650,000 barrels a day to oil demand this winter as record global natural gas prices incentivize power generators to switch from gas to oil....however, oil prices dipped in overnight trading after the American Petroleum Institute reported the 2nd straight week of unexpected inventory builds, and then slid from its prior seven year high early Wednesday on that API report, and on Saudi Arabia's decision to cut nearly all of its November crude prices for Asia, European and U.S.-bound cargoes, and then went on to settle $1.50 or 2% lower at $77.43 a barrel, after the EIA confirmed the API's report of higher inventories and Russian President Vladimir Putin indicated that his country would ramp up natural gas exports to help stabilize European energy markets...oil prices extended thier losses from the previous session on Thursday, falling below $75 a barrel, after Energy Secretary Jennifer Granholm said the US was considering selling oil from its strategic reserves, and as Russia said it was ready to stabilise the natural gas market, but rallied in the afternoon to settle 87 cents higher at $78.30 a barrel after the U.S. Department of Energy walked back their plans for an SPR release and an export ban and after Biden's national security adviser urged energy suppliers to lift flows to meet demand, saying that the United States is concerned about their failure to do so....oil prices continued rising overnight with the return of China to the markets, and opened 56 cents higher in New York on Friday, and then jumped to over $80 a barrel for the first time since October 2014 on a retreat in the U.S. dollar index, triggered by a weaker-than-expected September employment report, before settling $1.05 higher on the day at $79.35 a barrel, as the global energy crunch boosted U.S. prices to their highest in almost seven years as big power users struggled to meet demand....oil prices thus finished the week with a 4.6% increase, at their highest since October 31st, 2014

With several news sites citing a "7 year high" for oil prices on Monday, Tuesday, and again on Friday, we'll put up a longer term oil price graph to see what that looks like....

October 8 2012 oil prices

The above is a screenshot of the current interactive oil price chart from barchart.com, which i have set to show front month oil prices monthly over the past 10 years, which means you're seeing the same oil prices that were quoted by the media....this same chart can be reset to show prices of front month or individual monthly oil contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show oil prices by the minute, hour, day, week or month for each...each bar in the graph above represents the range of oil prices for a single month, with months when prices rose indicated in green, with the opening price at the bottom of the bar and the closing price at the top, and months when prices fell indicated in red, with the opening price at the top of the bar and the closing price at the bottom, while the small barely visible sticks above or below each monthly bar represent the extent of the price change above or below the opening and closing price during the month in question....likewise, the bars across the bottom show trading volume for the front month oil contract, for the months in question, again with up months indicated by green bars and down months indicated in red....

To find the month when oil prices were last as high as this week's, i've maneuvered my cursor to the month when prices were last at the $80 a barrel level we saw on Friday of this week...that turned out to be November 2014, which you can see by the readout of that month which has been generated by my cursor in small red print at the upper left of the graph, and which shows that the 'crude light' oil contract for December 2014 (CLZ14) opened that month priced at $80.59 a barrel, and closed that month priced at $66.16 a barrel....while that would seem to indicate that oil saw prices above this week's high of $80.11 a barrel early in November of 2014, i'd note that the Wall Street Journal affiliate website Marketwatch puts the date at October 31st, 2014...it could be that they are citing a different oil contract than the CLZ14 contract this graph shows for November...whatever the case, while one could say oil prices were at a 7 year high, we can see that the last time oil prices were as high at they were this week was just short of seven years ago...

Meanwhile, natural gas prices finished lower for the first time in the past eight weeks on the largest increase in US natural gas inventories in over a year....after rising 8.1% to $5.619 per mmBTU last week as natural gas shortages in Europe and Asia drove​ their​ prices to record levels, the contract price of natural gas for November delivery opened higher on Monday and rose 14.7 cents to $5.766 per mmBTU​,​ on forecasts that power generators would burn more of the fuel during the week than was previously expected, as lingering heat was still expected to keep A/C demand high in some parts of the country...US prices then surged 54.6 cents or 9.5% to $6.312  per mmBTU on Tuesday, as prices in Europe rocketed over 21% for November gas and ​by ​23% for December gas to fresh record highs, on worries European countries would not have enough natural gas stored for winter, as China and other Asian LNG buyers bid up prices for available cargoes...while US prices opened higher again on Wednesday, they quickly dropped 63.7 cents or over​ by more than​ 10% to $5.675 per mmBTU, after Vladimir Putin said Russia was ready to pump more gas to help stabilize European energy markets and US traders shifted focus back to domestic markets, where expectations were that supplies had grown more than normal for a fourth week in a row​....​ ​however, even after the EIA reported more natural gas had been added to storage than anyone had expected, natural gas prices ended Thursday virtually unchanged, settling up just two-tenths of a cent at $5.677 per mmBTU...US natural gas prices then slid 11.2 cents to $5.565 per mmBTU on Friday, on a drop in global gas prices and on forecasts for mild weather to keep heating demand at a minimum through late October, thus ending 1.0% l​ower for the week...

The EIA's natural gas storage report for the week ending October 1st indicated that the amount of working natural gas held in underground storage in the US rose by 118 billion cubic feet to 3,288 billion cubic feet by the end of the week, which ​still ​left our gas supplies 532 billion cubic feet, or 13.9% below the 3,820 billion cubic feet that were in storage on October 1st of last year, and 176 billion cubic feet, or 5.1% below the five-year average of 3,464 billion cubic feet of natural gas that have been in storage as of the1st of October in recent years...the 118 billion cubic foot increase in US natural gas in working storage this week was the largest weekly addition to storage since June 19th of last year, was more than the forecast for a 111 billion cubic foot addition ​from a survey of analysts ​queried ​by S&P Global Platts, and well more than the average addition of 81 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years, and also well more than the 75 billion cubic feet that were added to natural gas storage during the corresponding week of 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 October 1st indicated that after an increase in our oil imports, a big drop in our oil exports, and an increase in our oilfield production, we had surplus oil to add oil to our stored commercial crude supplies for the second time in nine weeks and for the thirteenth time in the past forty-six weeks….our imports of crude oil rose by an average of 483,000 barrels per day to an average of 6,552,000 barrels per day, after rising by an average of 87,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 906,000 barrels per day to an average of 2,114,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,921,000 barrels of per day during the week ending October 1st, 1,389,000 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 200,000 barrels per day higher at 11,300,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to​ have​ total​ed​ an average of 16,221,000 barrels per day during the cited reporting week…

meanwhile, US oil refineries reported they were processing an average of 15,744,000 barrels of crude per day during the week ending October 1st, 330,000 more barrels per day than the amount of oil they processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 204,000 barrels of oil per day were being added to 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 and from oilfield production was 273,000 barrels per day more than what was added to storage plus our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (-273,000) 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 balance sheet fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed...moreover, since last week’s unaccounted for oil was at (+1,310,000) barrels per day, there was an 1,583,000 barrel per day balance sheet difference in the crude oil fudge figure from a week ago, thus rendering the week over week supply and demand changes indicated by this report nonsense….however, since most everyone treats these weekly EIA reports as gospel and since these figures 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 reasonably accurate by most everyone in the industry….(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,453,000 barrels per day last week, which was 22.7% more than the 5,258,000 barrel per day average that we were importing over the same four-week period last year…the 204,000 barrel per day net increase in our crude inventories came as 335,000 barrels per day were added to our commercially available stocks of crude oil, while 131,000 barrels per day were pulled out from our Strategic Petroleum Reserve, part of an emergency loan of oil to Exxon in the wake of hurricane Ida….this week’s crude oil production was reported to be 200,000 barrels per day higher at 11.300,000 barrels per day because the EIA"s rounded estimate of the output from wells in the lower 48 states was 200,000 barrels per day higher at 10,900,000 barrels per day, while a 10,000 barrel per day increase in Alaska’s oil production to 448,000 barrels per day had no impact on the reported rounded national production total….US crude oil production had hit a pre-pandemic record high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 13.7% below that of our pre-pandemic production peak, but 34.1% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016…

meanwhile, US oil refineries were operating at 89.6% of their capacity while using those 15,744,000 barrels of crude per day during the week ending October 1st, up from 88.1% of capacity the prior week, and near normal utilization for early autumn refinery operations…the 15,744,000 barrels per day of oil that were refined this week were 13.7% more barrels than the 13,853,000 barrels of crude that were being processed daily during the pandemic impacted week ending October 2nd of last year, and ​also ​0.6% more than the 15,656,000 barrels of crude that were being processed daily during the week ending September 27th, 2019, when US refineries were operating at what was then a below normal 85.7% of capacity in the wake of tropical storm Imelda…

even with this week’s increase in the amount of oil being refined, the gasoline output from our refineries was lower, decreasing by 523,000 barrels per day to 9,366,000 barrels per day during the week ending October 1st, after our gasoline output had increased by 246,000 barrels per day over the prior week.…this week’s gasoline production was 1.6% less than the 9,522,000 barrels of gasoline that were being produced daily over the same week of last year, and 7.0% lower than the gasoline production of 10,066,000 barrels per day during the week ending October 4th, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 130,000 barrels per day to 4,778,000 barrels per day, after our distillates output had increased by 194,000 barrels per day over the prior week…after this week’s increase, our distillates output was 5.4% more than the 532,000 barrels of distillates that were being produced daily during the week ending October 2nd, 2020, while still 1.2% below the 4,835,000 barrels of distillates that were being produced daily during the week ending October 4th, 2019..

despite the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the twelfth time in twenty-six weeks, and for the 20th time in forty-five weeks, rising by 193,000 barrels to 221,809,000 barrels during the week ending October 1st, after our gasoline inventories had increased by 193,000 barrels over the prior week...our gasoline supplies increased by more this week even though the amount of gasoline supplied to US users rose by 28,000 barrels per day to 9,427,000 barrels per day because our imports of gasoline rose by 99,000 barrels per day to 1,088,000 barrels per day while our exports of gasoline fell by 321,000 barrels per day to a sixteen ​month low of 404,000 barrels per day…even after this week’s inventory increase, our gasoline supplies were 0.7% lower than last October 2nd's gasoline inventories of 226,747,000 barrels, and about 1% below the five year average of our gasoline supplies for this time of the year…

meanwhile, even with the increase in our distillates production, our supplies of distillate fuels decreased for the sixth time in eight weeks and for the 17th time in 26 weeks, falling by 396,000 barrels to 129,331,000 barrels during the week ending October 1st, after our distillates supplies had increased by 384,000 barrels during the prior week….our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 392,000 barrels per day to 4,365,000 barrels per day, while our imports of distillates fell by 2,000 barrels per day to 298,000 barrels per day, and even though our exports of distillates fell by 152,000 barrels per day to 768,000 barrels per day…but after seventeen inventory decreases over the past twenty-six weeks, our distillate supplies at the end of the week were 24.7% below the 171,796,000 barrels of distillates that we had in storage on October 2nd, 2020, and about 11% below the five year average of distillates stocks for this time of the year…

meanwhile, with the increase in our oil imports and the decrease in our oil exports, our commercial supplies of crude oil in storage rose for the sixth time in the past twenty weeks and for the 17th time in the past year, increasing by 2,345,000 barrels over the week, from 418,542,000 barrels on September 24th to 420,887,000 barrels on October 1st, after our commercial crude supplies had increased by 4,578,000 barrels the prior week…after this week’s increase, our commercial crude oil inventories remained about 7% below the most recent five-year average of crude oil supplies for this time of year, but were still 26.3% above the average of our crude oil stocks at the beginning of October over the 5 years at the beginning of the past decade, 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 jumped to record highs during the Covid lockdowns of last spring and remained elevated for most of the year after that, our commercial crude oil supplies as of this October 1st were 14.6% less than the 492,927,000 barrels of oil we had in commercial storage on October 2nd of 2020, and are now 1.1% less than the 425,569,000 barrels of oil that we had in storage on October 4th of 2019, but still 2.6% more than the 409,951,000 barrels of oil we had in commercial storage on October 5th of 2018…

finally, with our inventory of crude oil and and our supplies of all products made from oil still near multi year lows, we'll continue to check the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....we find that total inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, fell by​ an inconsequential​ 114,000 barrels this week, from 1,851,676,000 barrels on September 24th to 1,851,562,000 barrels on October 1st, after they had risen 10,049,000 barrels from a six year low the prior week..

This Week's Rig Count

The number of drilling rigs active in the US increased for 47th time out of the past 55 weeks during the week ending October 8th, but they still ​remained ​32.6% below the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US increased by five to 533 rigs this past week, which was also 264 more rigs the pandemic hit 269 rigs that were in use as of the October 9th report of 2020, but was still 1,396 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global oil market in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 5 to 433 oil rigs this week, after oil rigs had risen by 7 oil rigs the prior week, and there are 240 more oil rigs active now than were running a year ago, while they still amount to just 26.5% the high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 99 natural gas rigs, which was still up by 26 natural gas rigs from the 73 natural gas rigs that were drilling during the same week a year ago, but still only 6.2% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….in addition to oil and gas rigs, a horizontal rig that Baker Hughes classifies as "miscellaneous' continues to drill in Kern county California, while a year ago there were three such "miscellaneous' rigs reported to be active...

The Gulf of Mexico rig count was down by 1 rig to ten rigs this week, which is ​also short of the 14 rigs deployed in the Gulf the week before Hurricane Ida approached, with nine of this week's Gulf rigs drilling for oi in Louisiana waters and another drilling for oil in Alaminos Canyon, offshore from Texas....the Gulf rig count is also down by 4 rigs from a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters….in addition, one of the two rigs that had been drilling for natural gas off the shore of the Kenai peninsula in Alaska was shut down this week, and hence this week's total national offshore rig count of 11 rigs is down by two from last week and down by three rigs from the 14 offshore rigs running a year ago, when there was no drilling off Alaska or off our other coasts...

In addition to those rigs offshore, we continue to have two water based rigs drilling inland; one is a directional rig targeting oil at a depth of over 15,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississipp​i​, and the other is drilling for oil in the Galveston Bay area, and hence the inland waters rig count of two is up from one from a year ago..

The count of active horizontal drilling rigs was up by 9 to 483 horizontal rigs this week, which was more than double the 233 horizontal rigs that were in use in the US on October 9th of last year, but was just 35.2% of the record 1,374 horizontal rigs that were deployed on November 21st of 2014..…on the other hand, the vertical rig count was down by 4 to 28 vertical rigs this week, but those were still up by 13 from the 15 vertical rigs that were operating during the same week a year ago….at the same time, the directional rig count was unchanged at 22 directional rigs this week, and those are now up by 1 from the 21 directional rigs that were in use on October 9th 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 October 8th, the second column shows the change in the number of working rigs between last week’s count (October 1st) and this week’s (October 8th) count, the third column shows last week’s October 1st active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday 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 9th of October, 2020...

October 8 2021 rig count summary

as you can see, that modest 5 rig increase masked a ​somewhat ​larger number of changes across several states and basins....checking theRigs by State file at Baker Hughes for changes in the Texas Permian basin, we find that we find that four rigs were added in Texas Oil District 8, which is the core Permian Delaware, while one rig was removed from Texas Oil District 8A, which includes the northern counties of the Permian Midland, thus netting out to a three rig increase in the Texas Permian, ​and ​thus accounting for ​the ​changes in the Permian basin​ ​this week....elsewhere in Texas, we also have a rig added in Texas Oil District 4, which would account for this week's Eagle Ford shale increase, and also bring the Texas rig count change up to +4, as we see on the state table above...the rig added in California was deployed in a basin that Baker Hughes doesn't track, as was the rig added in Oklahoma, and since Alaska's count shows no change despite the offshore rig shutdown, we have to assume a land based rig was concurrently added elsewhere in the state, also in a basin that Baker Hughes keep track of....meanwhile, the oil rig removed from the Gulf of Mexico accounts for the rig decrease in Louisiana...the remaining changes were ​all ​to natural gas rigs in the Appalachain basin and netted out to no change in gas rigs​ this week​; two natural gas rigs were added in the Marcellus in West Virginia, while a single natural gas rig was removed from the Marcellus in Pennsylvania, and another natural gas rig was shut down in Ohio's Utica shale...

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note: there’s more here

Sunday, October 3, 2021

US natural gas hits highest price since 2008, closes at 7 1/2 year weekly high; European and Asian prices 5 times higher

Oil prices rose for a sixth consecutive week as rising global demand amid tight supplies more than offset higher US inventories....after rising 3.0% to $73.98 a barrel last week as U.S. crude inventories fell to a 35 month low and as global oil supplies tightened, the contract price for US light sweet crude for November delivery opened higher on Monday on continuing signs that global oil inventories were falling sharply, and rose nearly 2% to close $1.47 higher at $75.45 a barrel, as parts of the globe, especially China and India, were seeing demand pick up with the easing of pandemic conditions...oil prices moved higher early Tuesday, with Brent crude, the International oil benchmark, topping $80 per barrel for the first time since October 2018, as the global natural gas shortage stoked demand for oil as a substitute, before reversing those early gains and dropping to a 16 cent loss at $75.29 a barrel, weighed down by a rallying U.S. Dollar and a selloff in U.S. equity markets, triggered by default warnings from Treasury Secretary Janet Yellen...oil prices then extended their Tuesday losses in overnight trading after the American Petroleum Institute reported across-the-board builds in U.S. crude and petroleum product supplies and opened 91 cents lower on Wednesday, as a stronger U.S. dollar and concerns over a possible government default added further headwinds, before settling with a 46 cent, or a 0.6% loss at $74.83 a barrel, even as OPEC confirmed plans to maintain a deliberate approach to adding supply to the market. after the EIA confirmed the first increase in US supplies in eight weeks...but oil prices steadied on Thursday after a report that China was prepared to buy more oil and other energy supplies to meet growing demand offset the price pressure from the unexpected rise in U.S. crude inventories, and settled 20 cents higher after a volatile session at $75.03 a barrel, thus contributing to a sixth straight quarterly climb for U.S. benchmark prices...oil traded lower early Friday, after European manufacturing surveys indicated a sharp deceleration of growth in September, and as global equity markets extended their decline due to rattled supply chains and rising consumer prices, but rallied to close 85 cents higher at $75.88 a barrel amid reports OPEC+, due to meet on Monday, had discussed how to increase output faster in the coming months, and on word that the White House had spoken with Saudi Arabia about oil prices, and thus finished the week 2.6% higher, while posting a sixth straight weekly gain, the longest streak of weekly advances since early July....

Meanwhile, natural gas prices finished higher for the seventh straight week, as shortages in Europe and Asia drove prices to record levels...after inching up 0.7% to $5.140 per mmBTU last week as domestic and global supply problems outweighed the impact of bearish weather patterns, the contract price of natural gas for October delivery opened 1% higher on Monday and jumped 14% to $5.851 per mmBTU, before settling with an 11% gain on the day at $5.706 per mmBTU, as gas prices at or near record highs of around $26 per mmBTU in Europe and $28 in Asia kept demand for U.S. LNG exports strong...the rally continued into Tuesday, with October gas trading as high as $6.280 per mmBTU before settling with a 13.5 cent gain at a 7 1/2 year closing high of $5.841, as only the limited capacity of US LNG exports prevented US gas prices from following global prices to the moon, while the contract price of natural gas for November delivery, which was to take over as the prompt month on Wednesday, gained 14.9 cents to $5.880 per mmBTU...with markets now tracking the November contract, natural gas prices gave back half the week's gains and tumbled 7% to $5.477 per mmBTU on Wednesday, the biggest one-day drop since January, on expectations that mild weather forecasts for the coming weeks would allow utilities to boost U.S. stockpiles to near-normal levels ahead of the winter heating season....but prices bounced back 39.0 cents or 7% to a new 7 year high of $5.867 per mmBTU on Thursday, despite a larger than normal injection of gas into storage, as fears that Europe would not have enough gas in storage for the winter heating season boosted global prices to record levels...but ​US ​gas prices came tumbling down again on Friday, and settled off 24.8 cents at $5.619 per mmBTU, as U.S. traders gave more weight to bearish domestic fundamentals than escalating fears of a global supply shortage this winter, but still finished the week 8.1% higher, the largest one week net and percentage gain since the week ending Aug. 27, and ​capping ​the largest six week gain since the week ending Feb. 21, 2014...

The seven year high for natural gas prices that we've cited has been widely reported by the media, but this week's brief foray into prices above $6 appears to break this decade's record high to test those of the last, as the following graph will show us...

natural gas prices October 2 2021

The above graph is a screenshot of the interactive natural gas price chart from barchart.com, which i have set to show front month natural gas prices monthly over the past 20 years, which means you're seeing the range of natural gas prices over that time as they were quoted daily by the media...this same chart can be reset to show prices of front month or individual monthly natural gas contracts over time periods ranging from 1 day to 30 years, as the menu bar on the top indicates, and also to show natural gas prices by the minute, hour, day, week or month for each...each bar in the graph above represents the range of natural gas prices for a single month, with months when prices rose indicated in green, and months when prices fell indicated in red, with the small barely visible sticks above or below each monthly bar representing the extent of the price change above or below the opening and closing price for the month in question....likewise, the bars across the bottom show trading volume for the months in question, again with up months indicated by green bars and down months indicated in red...it's clear that natural prices have risen well above the highs of the winter 2013 to 2014 period, so i've endeavored to position my cursor on the month when prices last hit the $6.280 per mmBTU level we saw ​on Tuesday of ​this week...that turned out to be December 2008, which you can see by the readout of that month which has been generated in small red print at the upper left of the graph, and which shows that the natural gas contract for January 2009 (NGF09) opened that month priced at $6.550 per mmBTU, and closed that month priced at $5.622 per mmBTU....although ​gas ​prices briefly touched $6.240 per mmBTU in January 2009, they hadn't been above $6 since until this week..

NB: note that since the above is a monthly price graph, Friday's 24.6 cent ​price ​drop​,​ on October 1st​,​ gets a monthly bar of its own, which is why the last bar shown points down, despite a weekly close that was at a 7 1/2 year high...

The EIA's natural gas storage report for the week ending September 24th indicated that the amount of working natural gas held in underground storage in the US rose by 88 billion cubic feet to 3,170 billion cubic feet by the end of the week, which left our gas supplies 575 billion cubic feet, or 15.4% below the 3,745 billion cubic feet that were in storage on September 24th of last year, and 213 billion cubic feet, or 6.3% below the five-year average of 3,383 billion cubic feet of natural gas that have been in storage as of the 24th of September in recent years...the 88 billion cubic foot increase in US natural gas in working storage this week was close to the forecast for a 87 billion cubic foot addition expected by a survey of analysts by S&P Global Platts, but ​well ​​more than the average addition of 72 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years, and also more than the 74 billion cubic feet that were added to natural gas storage during the corresponding week of 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 September 24th indicated that after another sizable increase in our oilfield production and a big jump in oil that could not be unaccounted for, we managed to add oil to our stored commercial crude supplies for the first time in eight weeks and for the twelvth time in the past forty-five weeks….our imports of crude oil rose by an average of 87,000 barrels per day to an average of 6,552,000 barrels per day, after rising by an average of 704,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 211,000 barrels per day to an average of 3,020,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,532,000 barrels of per day during the week ending September 24th, 124,000 fewer barrels per day than the net of our imports minus our exports during the prior week…over the same period, the production of crude oil from US wells was reportedly 500,000 barrels per day higher at 11,100,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to total an average of 14,632,000 barrels per day during the cited reporting week…

meanwhile, US oil refineries reported they were processing an average of 15,415,000 barrels of crude per day during the week ending September 24th, 67,000 more barrels per day than the amount of oil they processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 528,000 barrels of oil per day were being added to 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 and from oilfield production was 1,310,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week…to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (+1,310,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed...moreover, since last week’s unaccounted for oil was at (+422,000) barrels per day, that means there was an 888,000 barrel per day balance sheet difference in the crude oil fudge figure from a week ago, thus rendering the week over week supply and demand changes indicated by this report useless….however, since most everyone treats these weekly EIA reports as gospel and since these figures 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 reasonably accurate by most everyone in the industry….(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,147,000 barrels per day last week, which was 18.7% more than the 5,180,000 barrel per day average that we were importing over the same four-week period last year…the 528,000 barrel per day net increase in our crude inventories came as 654,000 barrels per day were added to our commercially available stocks of crude oil, which was partly offset by a 126,000 barrels per day withdrawal of oil that had been stored in our Strategic Petroleum Reserve, part of an emergency loan of oil to Exxon in the wake of hurricane Ida….this week’s crude oil production was reported to be 500,000 barrels per day higher at 11.100,000 barrels per day because the EIA"s rounded estimate of the output from wells in the lower 48 states was 500,000 barrels per day higher at 10,700,000 barrels per day, while a 9,000 barrel per day increase in Alaska’s oil production to 438,000 barrels per day had no impact on the reported rounded national production total….US crude oil production had hit a pre-pandemic record high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 15.3% below that of our pre-pandemic production peak, but 31.7% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016…

meanwhile, US oil refineries were operating at 88.1% of their capacity while using those 15,415,000 barrels of crude per day during the week ending September 24th, up from 87.5% of capacity the prior week, and near normal utilization for early autumn refinery operations…while the 15,415,000 barrels per day of oil that were refined this week were 12.8% more barrels than the 13,670,000 barrels of crude that were being processed daily during the pandemic impacted week ending September 25th of last year, they were 3.8% below the 16,017,000 barrels of crude that were being processed daily during the week ending September 27th, 2019, when US refineries were operating at what was then a below normal 86.4% of capacity​ in the wake of tropical storm Imelda​…

with this week’s increase in the amount of oil being refined, the gasoline output from our refineries was also higher, increasing by 246,000 barrels per day to 9,889,000 barrels per day during the week ending September 24th, after our gasoline output had increased by 372,000 barrels per day over the prior week.…while this week’s gasoline production was 11.2% higher than the 8,892,000 barrels of gasoline that were being produced daily over the same week of last year, it was still 1.9% lower than the gasoline production of 10,081,000 barrels per day during the week ending September 27th, 2019….at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 194,000 barrels per day to 4,648,000 barrels per day, after our distillates output had increased by 298,000 barrels per day over the prior week…after this week’s increase, our distillates output was 6.7% more than the 4,358,000 barrels of distillates that were being produced daily during the week ending September 25th, 2020, while still 3.4% below the 4,813,000 barrels of distillates that were being produced daily during the week ending September 27th, 2019..

with a second big increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the eleventh time in twenty-five weeks, and for the 19th time in forty-four weeks, rising by 193,000 barrels to 221,809,000 barrels during the week ending September 24th, after our gasoline inventories had increased by 3,474,000 barrels over the prior week...our gasoline supplies increased by less this week because the amount of gasoline supplied to US users rose by 503,000 barrels per day to 9,399,000 barrels per day and because our imports of gasoline fell by 93,000 barrels per day to 989,000 barrels per day while our exports of gasoline rose by 104,000 barrels per day to 621,000 barrels per day…even after this week’s inventory increase, our gasoline supplies were 2.8% lower than last September 25th's gasoline inventories of 228,182,000 barrels, and about 3% below 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 sixteenth time in twenty-four weeks and for the 20th time in 40 weeks, rising by 2,554,000 barrels to 131,897,000 barrels during the week ending September 24th, after our distillates supplies had decreased by 2,554,000 barrels during the prior week….our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 451,000 barrels per day to 3,973,000 barrels per day, while our imports of distillates rose by 116,000 barrels per day to 300,000 barrels per day, and even though our exports of distillates rose by 341,000 barrels per day to 920,000 barrels per day…but after sixteen inventory decreases over the past twenty-five weeks, our distillate supplies at the end of the week were still 24.9% below the 172,758,000 barrels of distillates that we had in storage on September 25th, 2020, and about 12% below the five year average of distillates stocks for this time of the year…

meanwhile, with the recovery in our oil production from hurricane Ida finally catching up to the recovery in our oil refining, our commercial supplies of crude oil in storage rose for the fifth time in the past nineteen weeks and for the 17th time in the past year, increasing by 4,578,000 barrels over the week, from 413,964,000 barrels on September 17th to 418,542,000 barrels on September 24th, after our commercial crude supplies had decreased by 3,481,000 barrels the prior week…after this week’s increase, our commercial crude oil inventories were about 7% below the most recent five-year average of crude oil supplies for this time of year, but were still about 27% above the average of our crude oil stocks after the third week of September over the 5 years at the beginning of the past decade, 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 jumped to record highs during the Covid lockdowns of last spring and remained elevated for most of the year after that, our commercial crude oil supplies as of this September 24th were 15.0% less than the 492,426,000 barrels  of oil we had in commercial storage on September 25th of 2020, and are now 1.0% less than the 422,642,000 barrels of oil that we had in storage on September 27th of 2019, but still 3.6% more than the 403,964,000 barrels of oil we had in commercial storage on September 21st of 2018…

finally, with our inventory of crude oil and and our supplies of all products made from oil near multi year lows, we'll continue to check the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....we find that total inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, rose by 10,049,000 barrels this week, from ​a six and a half year low of ​1,841,627,000 barrels on September 17th, to 1,851,676,000 barrels on September 24th...  

This Week's Rig Count

The number of drilling rigs active in the US increased for 46th time out of the past 54 weeks during the week ending October 1st, but they were still 33.5% below the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US increased by seven to 528 rigs this past week, which was also 262 more rigs the pandemic hit 266 rigs that were in use as of the October 2nd report of 2020, but was still 1,401 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global oil market in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 7 to 421 oil rigs this week, after they had risen by 10 oil rigs the prior week, and there are now 239 more oil rigs active now than were running a year ago, while they still amount to just 26.2% the high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 99 natural gas rigs, which was still up by 25 natural gas rigs from the 74 natural gas rigs that were drilling during the same week a year ago, but still only 6.2% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….in addition to oil and gas rigs, a horizontal rig that Baker Hughes classifies as "miscellaneous' continues to drill in Kern county California, while a year ago there were three such "miscellaneous' rigs reported to be active...

The Gulf of Mexico rig count was up by three rigs to eleven rigs this week, which is still short of the 14 rigs deployed in the Gulf the week before Hurricane Ida approached, with ten of this week's Gulf rigs deployed in Louisiana waters and another drilling for oil in Alaminos Canyon, offshore from Texas...but the Gulf rig count is also still down by 3 rigs from a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters….however, there are still 2 rigs drilling for natural gas off the shore of the Kenai peninsula in Alaska this week, and hence this week's total national offshore rig count of 13 rigs is down by just one rig from the 14 offshore rigs running a year ago, when there was no drilling off Alaska or off our other coasts...

In addition to those rigs offshore, we continue to have two water based rigs drilling inland; one is a directional rig targeting oil at a depth of over 15,000 feet​,​ drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississipp, and the other is drilling for oil in the Galveston Bay area, so the inland waters rig count of two is up from one from a year ago..

The count of active horizontal drilling rigs was up by 3 to 474 horizontal rigs this week, which was more than double the 229 horizontal rigs that were in use in the US on October 2nd of last year, but was just over a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014….at the same time, the vertical rig count was up by 2 to a 19 month high of 32 vertical rigs this week, and those were also up by 16 from the 16 vertical rigs that were operating during the same week a year ago…..in addition, the directional rig count was up by 2 to 22 directional rigs this week, and those are now up by 1 from the 21 directional rigs that were in use on October 2nd 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 October 1st, the second column shows the change in the number of working rigs between last week’s count (September 24th) and this week’s (October 1st) count, the third column shows last week’s September 24th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday 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 2nd of October, 2020...

October 1 2021 rig count summary

this week's rig changes appear to be fairly straightforward; the three rigs that were added in Louisiana's offshore waters account for this week's increase in th​at state; other rigs in the state remained in place....checking the Rigs by State file at Baker Hughes for changes in the Texas Permian basin, we find that one rig was pulled out of Texas Oil District 8, which is the core Permian Delaware, while two rigs were added in Texas Oil District 7C, which includes the southern counties of the Permian Midland, thus netting out to a one rig increase in the Texas Permian, and covering all of this week's changes in the state​ of Texas​....since the Permian basin count was up by 3 rigs nationally, that means that the two rigs that were added in New Mexico had to have been deployed in the far west reaches of the Permian Delaware to account for the national increase in that basin...the only other rig addition​ ​nationally this week was in Oklahoma, and that appears to have been ​an oil rig ​deployed in a basin that Baker Hughes doesn't track...

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note: there’s more here

Sunday, September 26, 2021

US crude supplies at a 35 mo low; total supplies of oil plus products at a 6 1/2 year low; DUC well backlog at 6.7 months

US crude supplies at a 35 month low; total supplies of oil plus products made from it at a 6 1/2 year low; exports of distillates at a 28 week low; vertical drilling at an 18 month high; DUC well backlog at 6.7 months..

oil prices rose for a fifth straight week as global oil supplies tightened and U.S. crude inventories fell to a 35 month low..after rising 3.2% to $71.97 a barrel last week on ongoing hurricane impacts and on tightening supplies of crude and fuel, the contract price for US light sweet crude for October delivery opened lower Monday as a broad commodity sell-off in Asia flowed into US oil markets, and tumbled more than $2 by midafternoon as worries over the potential collapse of China property giant Evergrande dragged down global financial markets and fueled strength in the U.S. dollar before recovering to close $1.68 lower at $70.29 a barrel as traders grew more risk averse, ​thus boost​ing​ the dollar​ and making oil more expensive for holders of other currencies...however, oil prices reversed th​at drop on Tuesday, rising above Monday's opening at one point, after the US lifted travel restrictions on fully vaccinated foreign travelers from 33 countries, hence boosting the prospect for increased jet fuel demand, before settling with a modest gain of 27 cents at $70.56 a barrel, as concerns about the global demand outlook counterbalanced the struggle by big OPEC producers to supply enough ​oil ​meet that demand​,​ as trading in the October oil contract expired....with oil price quotes now referencing the contract price for US light sweet crude for November delivery, which had finished Tuesday up 35 cents at $70.49 a barrel, oil opened 36 cents higher on Wednesday, after the American Petroleum Institute reported lower inventories across the board​,​ and then surged more than 2% to settle $1.74 higher at $72.23 a barrel after the EIA reported U.S. crude stocks fell to their lowest levels in almost three years and that refin​ery demand​ had​ largely​ recovered from recent storms...the oil rally continued into Thursday on the large crude draw, as the Fed signaled it could soon start slowing the pace of its bond-buying program in a first step to withdraw pandemic-era stimulus, and settled $1.07 higher at a two month high of $73.30 a barrel, as equities rallied and the US dollar weakened, boosting the appeal of commodities priced in the currency...oil prices were up nearly 1% more on Friday on a report that global output disruptions had forced companies to pull large amounts of crude out of inventories, and settled 68 cents higher at $73.98 a barrel, as the global surge in natural gas prices was expected to force some consumers to switch to oil for heating ahead of winter...oil prices thus finished with a gain of 2.8% on the week, while the November US oil contract, which had closed last week priced at $71.82, finished 3.0% higher...

natural gas prices also rose​ again​ this week, in their case for the sixth straight week, as domestic and global supply problems outweighed the impact of bearish weather patterns... after rising 3.4% to $5.105 per mmBTU last week despite a larger than expected inventory build and cooler forecasts, the contract price of natural gas for October delivery fell 12.0 cents to a fresh one-week low of $4.985 per mmBTU on Monday on forecasts for milder weather over the next two weeks, even as gas prices in Europe and Asia soared to record highs over $25, as two US LNG export facilities remained down, one for maintenance and the other in the wake of Hurricane Nicholas...natural gas prices then fell 18.0 cents to a two week low of $4.805 per mmBTU on Tuesday as cooling weather patterns and interruptions to LNG exports portended larger additions to inventories ahead of winter draws...however, natural gas prices ended Wednesday unchanged after trading higher most of the day, despite gas prices at or near record highs of around $25 per mmBTU in Europe and near $28 per mmBTU in Asia...natural gas prices rebounded vigorously on Thursday, propelled by domestic and global supply challenges as the peak winter demand season loomed​,​ and settled 17.1 cents higher at $4.976 per mmBTU​,​ after earlier rising to $5.037 per mmBTU on an injection of gas into storage that was ​​on a par with most forecasts....natural gas prices then climbed over 3% to a one-week high on Friday as some parts of the country started to crank up heaters with the coming of cooler weather even as air conditioning power demand elsewhere declined...​and on the strength of that two day rally, natural gas contract prices managed to end with a 0.7% gain on the week, even as cash prices at most major US markets ended lower..

the EIA's natural gas storage report for the week ending September 17th indicated that the amount of working natural gas held in underground storage in the US rose by 76 billion cubic feet to 3,082 billion cubic feet by the end of the week, which left our gas supplies 589 billion cubic feet, or 16.0% below the 3,671 billion cubic feet that were in storage on September 17th of last year, and 229 billion cubic feet, or 6.9% below the five-year average of 3,311 billion cubic feet of natural gas that have been in storage as of the 17th of September in recent years...the 76 billion cubic foot increase in US natural gas in working storage this week was close to the forecast for a 75 billion cubic foot addition from a Reuters survey of analysts, ​and only a ​tad more than the average addition of 74 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years, and also ​slightly ​more than the 70 billion cubic feet that were added to natural gas storage during the corresponding week of 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 September 17th indicated that despite sizeable increases in our oilfield production and our oil imports, we still needed to withdraw oil from our stored commercial crude supplies for the 7th consecutive week, and for the 33rd time in the past forty-four weeks….our imports of crude oil rose by an average of 704,000 barrels per day to an average of 6,465,000 barrels per day, after falling by an average of 44,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 185,000 barrels per day to an average of 2,809,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,656,000 barrels of per day during the week ending September 17th, 519,000 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 500,000 barrels per day higher at 10,600,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to total an average of 14,265,000 barrels per day during the cited reporting week…

meanwhile, US oil refineries reported they were processing an average of 15,347,000 barrels of crude per day during the week ending September 17th, 960,000 more barrels per day than the amount of oil they processed during the prior week, while over the same period the EIA’s surveys indicated that an average of 669,000 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 422,000 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 plugged a (+422,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed...however, since most everyone treats these weekly EIA reports as gospel and since these figures 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 reasonably accurate by most everyone in the industry….(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,094,000 barrels per day last week, which was 18.9% more than the 5,125,000 barrel per day average that we were importing over the same four-week period last year…the 669,000 barrel per day net decrease in our crude inventories included 497,000 barrels per day that were pulled out of our commercially available stocks of crude oil, and 172,000 barrels per day of oil that had been stored in our Strategic Petroleum Reserve, part of an emergency loan of oil to Exxon in the wake of hurricane Ida….this week’s crude oil production was reported to be 500,000 barrels per day higher at 10,600,000 barrels per day because the EIA"s rounded estimate of the output from wells in the lower 48 states was 500,000 barrels per day higher at 10,200,000 barrels per day, while a 8,000 barrel per day increase in Alaska’s oil production to 429,000 barrels per day had no impact on the reported rounded national production total….US crude oil production had hit a pre-pandemic record high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 19.1% below that of our pre-pandemic production peak, but still 25.8% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016…

meanwhile, US oil refineries were operating at 87.5% of their capacity while using those 15,347,000 barrels of crude per day during the week ending September 10th, up from 82.1% of capacity the prior week, but still a bit below normal utilization for early autumn refinery operations…while the 15,347,000 barrels per day of oil that were refined this week were 14.8% more barrels than the 13,370,000 barrels of crude that were being processed daily during the pandemic impacted week ending September 18th of last year, they were 7.1% below the 16,513,000 barrels of crude that were being processed daily during the week ending September 20th, 2019, when US refineries were operating at what was then a near normal 89.8% of capacity…

with this week’s increase in the amount of oil being refined, the gasoline output from our refineries was also higher, increasing by 372,000 barrels per day to 9,643,000 barrels per day during the week ending September 17th, after our gasoline output had decreased by 851,000 barrels per day over the prior week.…while this week’s gasoline production was 3.5% higher than the 9,315,000 barrels of gasoline that were being produced daily over the same week of last year, it was 5.8% lower than the gasoline production of 10,240,000 barrels per day during the week ending September 20th, 2019….at the same time, our refineries’  production of distillate fuels (diesel fuel and heat oil) increased by 298,000 barrels per day to 4,454,000 barrels per day, after our distillates output had decreased by 29,000 barrels per day over the prior week…but even after this week’s increase, our distillates output was a bit less than the 4,470,000 barrels of distillates that were being produced daily during the week ending September 18th, 2020, and 10.9% below the 5,000,000 barrels of distillates that were being produced daily during the week ending September 20th, 2019..

with the big increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the tenth time in twenty-four weeks, and for the 19th time in forty-four weeks, rising by 3,474,000 barrels to 221,616,000 barrels during the week ending September 17th, after our gasoline inventories had decreased by 1,857,000 barrels over the prior week...our gasoline supplies increased this week even though the amount of gasoline supplied to US users rose by 4,000 barrels per day to 8,896,000 barrels per day because our imports of gasoline rose by 444,000 barrels per day to 1,082,000 barrels per day while our exports of gasoline fell by 13,000 barrels per day to 621,000 barrels per day…even after this week’s inventory increase, our gasoline supplies were 2.6% lower than last September 18th's gasoline inventories of 227,499,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year…

meanwhile, even with the increase in our distillates production, our supplies of distillate fuels decreased for the sixteenth time in twenty-four weeks and for the 20th time in 40 weeks, falling by 2,554,000 barrels to 131,897,000 barrels during the week ending September 17th, after our distillates supplies had decreased by 1,689,000 barrels during the prior week….our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 629,000 barrels per day to 4,424,000 barrels per day, while our imports of distillates rose by 20,000 barrels per day to 184,000 barrels per day and even though our exports of distillates fell by 188,000 barrels per day to a 28 week  low of 579,000 barrels per day…after sixteen inventory decreases over the past twenty-four weeks, our distillate supplies at the end of the week were 26.5% below the 175,942,000 barrels of distillates that we had in storage on September 18th, 2020, and about 14% below the five year average of distillates stocks for this time of the year…

meanwhile, with our oil refining recovering from Ida faster than our oil production has, our commercial supplies of crude oil in storage fell for the sixteenth time in eightteen weeks and for the 36th time in the past year, decreasing by 3,481,000 barrels over the week, from 417,445,000 barrels on September 10th to a 35 month low of 413,964,000 barrels on September 17th, after our commercial crude supplies had decreased by 6,422,000 barrels the prior week…after this week’s decrease, our commercial crude oil inventories were about 8% below the most recent five-year average of crude oil supplies for this time of year, but were still about 26% above the average of our crude oil stocks after the third week of September over the 5 years at the beginning of the past decade, 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 jumped to record highs during the Covid lockdowns of last spring and remained elevated for most of the year after that, our commercial crude oil  supplies as of this September 18th were 16.3% less than the 494,406,000 barrels of oil we had in commercial storage on September 19th of 2020, and are now 1.3% less than the 419,538,000 barrels of oil that we had in storage on September 20th of 2019, but still 4.5% more than the 395,989,000 barrels of oil we had in commercial storage on September 21st of 2018…

finally, with our inventory of crude oil and and our supplies of all products made from oil, we're also going to check the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....we find that total inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, fell by 3,788,000 barrels this week, from 1,845,415,000 barrels on September 10th to 1,841,627,000 barrels on September 17th, which is the lowest since March 6th, 2015, and hence is a 6 1/2 year low... 

This Week's Rig Count

The number of drilling rigs active in the US increased for 45th time out of the past 53 weeks during the week ending September 24th, but they were still 34.3% below the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US increased by nine to 521 rigs this past week, which was also 260 more rigs the pandemic hit 261 rigs that were in use as of the September 25th report of 2020, but was still 1,408 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global oil market in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 10 to 421 oil rigs this week, after they had also risen by 10 oil rigs the prior week, and there are now 230 more oil rigs active now than were running a year ago, while they still amount to just 26.1% 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 fell by one to 99 natural gas rigs, which was still up by 24 natural gas rigs from the 71 natural gas rigs that were drilling during the same week a year ago, but still only 6.2% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….in addition to oil and gas rigs, a horizontal rig that Baker Hughes classifies as "miscellaneous' continues to drill in Kern county California, while a year ago there were three such "miscellaneous' rigs reported to be active...

The Gulf of Mexico rig count was up by four rigs to eight rigs this week, which is still only a partial recovery after Gulf rigs fell from 14 rigs the week before Hurricane Ida approached, with seven of this week's rigs deployed in Louisiana waters and another drilling for oil in Alaminos Canyon, offshore from Texas...but the Gulf rig count is still down by 6 rigs from a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters….however, there are still 2 rigs drilling for natural gas off the shore of the Kenai peninsula in Alaska this week, and hence the total national offshore rig count of 10 rigs is down by just 4 rigs from the 14 offshore rigs running a year ago, when there was no drilling off Alaska or off our other coasts...

In addition to those rigs offshore, a directional rig targeting oil at a depth of over 15,000 feet returned to an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi this week, one of three such inland waters rigs that were shut down in Louisiana in the wake of Ida...last week a ​new ​rig ​had ​started drilling for oil in ​the ​Galveston Bay​ area​, so the inland waters rig count is now two, up from one from a year ago..

The count of active horizontal drilling rigs was up by 5 ro 471 horizontal rigs this week, which was more than double the 224 horizontal rigs that were in use in the US on September 25th of last year, but was just over a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014….at the same time, the vertical rig count was up by 1 to an 18 month high of 30 vertical rigs this week, and those were also up by 14 from the 16 vertical rigs that were operating during the same week a year ago…..in addition, the directional rig count was up by 3 to 20 directional rigs this week, but those were still down by 1 from the 21 directional rigs that were in use on September 25th 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 September 24th, the second column shows the change in the number of working rigs between last week’s count (September 17th) and this week’s (September 24th) count, the third column shows last week’s September 17th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday 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 25th of September, 2020...

September 24 2021 rig count summary

Louisiana's rig count was up by four with the addition of the inland waters rig in Plaquemines Parish and the three rigs in the state's offshore waters... Oklahoma's four rig increase includes an oil rig added in the Cana Woodford and an oil rig added in the Arkoma Woodford, where a natural gas rig is already deployed, as well as three more rigs in Oklahoma basins that Baker Hughes doesn't name, while at the same time an oil rig was pulled out of the Granite Wash in the area of Oklahoma adjacent to the Texas panhandle...in Texas, the Rigs by State file at Baker Hughes shows that three rigs were added in Texas Oil District 8, which is the core Permian Delaware, while a rig was pulled out of Texas Oil District 8A, which includes the northern counties of the Permian Midland, and another rig was pulled out from Texas Oil District 7C, which includes the southern counties of the Permian Midland, thus ​netting out to the one rig increase in the Permian basin...also in Texas, we find that two rigs were added in Texas Oil District 1, at least one of which was targeting the Eagle Ford shale, while a rig was pulled out of Texas Oil District 4, which could have also been an Eagle Ford rig if both of the District 1 rig additions were targeting that basin...elsewhere, the rig pulled out of Utah had been drilling in the Uintah basin, even though it's not named by Baker Hughes, because all current drilling activity in Utah has been in that basin, while the lone natural gas rig change came as the natural gas rig that started drilling into the Marcellus shale in Cattaraugus County, New York, last week was shut down this week...

DUC well report for August

Last week saw the release of the EIA's Drilling Productivity Report for September, which includes the EIA's August data for drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions....that data showed a decrease in uncompleted wells nationally for the 15th month in a row, as both completions of drilled wells and drilling of new wells increased, but remained below the pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 248 wells, falling from 5,961 DUC wells in July to 5,713 DUC wells in August, which was also 35.3% fewer DUCs than the 8,829 wells that had been drilled but remained uncompleted as of the end of August of a year ago...this month's DUC decrease occurred as 609 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during August, up from the 577 wells that were drilled in July, while 857 wells were completed and brought into production by fracking, up from the 838 completions seen in July, and up from the pandemic hit 414 completions seen in August of last year, but still down by 31.9% from the 1,258 completions of August 2019....at the August completion rate, the 5,713 drilled but uncompleted wells left at the end of the month represents a 6.7 month backlog of wells that have been drilled but are not yet fracked, down from the 7.1 month DUC well backlog of a month ago, a ratio that is now approaching that of the year prior to the pandemic, despi​te​ a completion rate that is still a third below the pre-pandemic norm...

both oil producing regions and natural gas producing regions saw DUC well decreases in August, while none of the major basins reported ​a ​DUC well increase....the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico decreased by 130, from 2,249 DUC wells at the end of July to 2,119 DUCs at the end of August, as 270 new wells were drilled into the Permian during August, while 400 wells in the region were being fracked...in addition, DUCs in the Eagle Ford​ shale​ of south Texas decreased by 43, from 912 DUC wells at the end of July to 869 DUCs at the end of August, as 60 wells were drilled in the Eagle Ford during August, while 103 already drilled Eagle Ford wells were completed.... at the same time, there was also a decrease of 27 DUC wells in the Bakken of North Dakota, where DUC wells fell from 590 at the end of July to 563 DUCs at the end of August, as 39 wells were drilled into the Bakken during August, while 66 of the drilled wells in the Bakken were being fracked....meanwhile, the number of uncompleted wells remaining in Oklahoma's Anadarko ​basin ​decreased by 19, falling from 838 at the end of July to 819 DUC wells at the end of August, as 33 wells were drilled into the Anadarko basin during July, while 52 Anadarko wells were completed....in addition, DUC wells in the Niobrara chalk of the Rockies' front range fell by 9, decreasing from 380 at the end of July to 371 DUC wells at the end of August, as 89 wells were drilled into the Niobrara chalk during August, while 98 Niobrara wells were being fracked....

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 16 wells, from 590 DUCs at the end of July to 574 DUCs at the end of August, as 71 wells were drilled into the Marcellus and Utica shales during the month, while 87 of the already drilled wells in the region were fracked....meanwhile, the uncompleted well inventory in the natural gas producing Haynesville shale of the northern Louisiana-Texas border region was down by four to 398 DUCs, as 47 wells were drilled into the Haynesville during August, while 51 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of August, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a total of 228 wells to 4741 wells, while the uncompleted well count in the natural gas  basins (the Marcellus, the Utica, and the Haynesville) decreased by 20 wells to 972 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...

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note: there's more here...