US oil prices see-sawed higher over the past week as oil traders reacted to developing stories out of the Israeli-Palestinian conflict, but pulled back from well over $90 on Friday to settle just 1.2% higher at $88.75 a barrel in reaction to a Bloomberg report that U.S. and its European allies were pressuring Israel to delay its ground offensive into Gaza....natural gas prices, on the other hand, fell every day this week and ended 9.0% lower at $2.899 per mmBTU, pressured by weak weather related demand, record production, and a bearish storage report....
The EIA's natural gas storage report for the week ending October 13th indicated that the amount of working natural gas held in underground storage in the US increased by 97 billion cubic feet to 3,626 billion cubic feet by the end of the week, which left our natural gas supplies 300 billion cubic feet, or 9.0% above the 3,326 billion cubic feet that were in storage on October 13th of last year, and 175 billion cubic feet, or 5.1% more than the five-year average of 3,451 billion cubic feet of natural gas that were in working storage as of the 13th of October over the most recent five years…the 97 billion cubic foot injection into US natural gas working storage for the cited week was much more than the 80 billion cubic feet addition to supplies that was expected by industry analysts surveyed by Reuters, and also more than the average 85 billion cubic feet addition to natural gas storage that has been typical for the same Autumn week over the past 5 years, but less than the 113 billion cubic feet that were added to natural gas storage during the corresponding week of 2022,…
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 13th indicated that after a big jump in our oil exports and a decrease in our oil imports, we had to pull oil out of our stored commercial crude supplies for the eleventh time in fourteen weeks, and for the 22nd time in the past 43 weeks, despite a big jump in weekly oil supplies that the EIA could not account for....Our imports of crude oil fell by an average of 387,000 barrels per day to average 5,942,000 barrels per day, after rising by an average of 115,000 barrels per day the prior week, while our exports of crude oil rose by 2,234,000 barrels per day to average 5,301,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 641,000 barrels of oil per day during the week ending October 13th, 2,621,000 fewer barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells remained at its all time high of 13,200,000 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 averaged a total of 13,841,000 barrels per day during the October 13th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 15,396,000 barrels of crude per day during the week ending October 13th, an average of 192,000 more barrels per day than the amount of oil that our refineries were processing during the prior week, while over the same period the EIA’s surveys indicated that an average of 642,000 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, the crude oil figures provided by the EIA for the week ending October 13th appear to indicate that our total working supply of oil from net imports and from oilfield production was 914,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week. To account for that difference between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [ +914,000 ] barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there was an error in the week’s oil supply & demand figures that we have just transcribed.... Moreover, since last week’s “unaccounted for crude oil” figure was at [+ 194,000 ] barrels per day, that means there was a 719,000 barrel per day difference between this week's oil balance sheet error and the EIA's crude oil balance sheet error from a week ago, and hence the changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, and therefore useless...however, since most oil traders react to these weekly EIA reports as if they were accurate, and since these weekly figures therefore often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably reliable 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)….(NB: there is also a more recent twitter thread from an EIA administrator addressing these errors, and what they had hoped to do about it)
This week's 642,000 barrel per day decrease in our overall crude oil inventories all came out of our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve was unchanged. Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to 6,428,000 barrels per day last week, which was still 5.5% more than the 6,092,000 barrel per day average that we were importing over the same four-week period last year. This week’s crude oil production was reported to be unchanged at an all time high of 13,200,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 12,800,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day lower at 417,000 barrels per day but still added the same 400,000 barrels per day to the EIA's rounded national total as it did last week...US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure is now 0.8% above that of our pre-pandemic production peak, and 36.1% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021.
US oil refineries were operating at 86.1% of their capacity while processing those 15,396,000 barrels of crude per day during the week ending October 13th, up from their 85.7% utilization rate of last week, a refinery utilization that is typical during the Fall, when refineries are undergoing seasonal maintenance during a changeover to produce winter blends of fuel.. The 15,396,000 barrels per day of oil that were refined this week were1.0% less than the 15,550,000 barrels of crude that were being processed daily during week ending October 14th of 2022, and 0.3% less than the 15,436,000 barrels that were being refined during the prepandemic week ending October 11th, 2019, when our refinery utilization rate was at 83.1%, a two year low at that time..
With the increase in the amount of oil being refined this week, the gasoline output from our refineries was also higher, increasing by 77,000 barrels per day to 9,761,000 barrels per day during the week ending October 13th, after our refineries' gasoline output had increased by 858,000 barrels per day during the prior week. This week’s gasoline production was 4.4% more than the 9,381,000 barrels of gasoline that were being produced daily over the same week of last year, but still 2.4% less than the gasoline production of 9,998,000 barrels per day during the prepandemic week ending October 11th, 2019. On the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 33,000 barrels per day to 4,694,000 barrels per day, after our distillates output had decreased by 38,000 barrels per day during the prior week. With that decrease, our distillates output was 6.5% less than the 5,023,000 barrels of distillates that were being produced daily during the week ending October 14th of 2022, but 0.1% more than the 4,688,000 barrels of distillates that were being produced daily during the week ending October 11th, 2019..
Even with this week's increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the 24th time in thirty-four weeks, decreasing by 2,370,000 barrels to 223,301,000 barrels during the week ending October 13th, after our gasoline inventories had decreased by 1,313,000 barrels during the prior week. Our gasoline supplies fell by more this week because the amount of gasoline supplied to US users rose by 362,000 barrels per day to 8,943,000 barrels per day, while our imports of gasoline rose by 117,000 barrels per day to 706,000 barrels per day and our exports of gasoline fell by 97,000 barrels per day to 1,081,000 barrels per day,....Even after twenty-four gasoline inventory decreases over the past thirty-four weeks, our gasoline supplies were 6.7% above than last October 14th's gasoline inventories of 209,368,000 barrels, and slightly above the five year average of our gasoline supplies for this time of the year…
With this week's decrease in our our distillates production, our supplies of distillate fuels fell for the eighteenth time in thirty-two weeks, decreasing by 3,185,000 barrels to 113,773,000 barrels over the week ending October 13th, after our distillates supplies had decreased by 1,837,000 barrels during the prior week. Our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 746,000 barrels per day to an 18 month high of 4,416,000 barrels per day, and even though our exports of distillates fell by 630,000 barrels per day to a 20 month low of 810,000 barrels per day, while our imports of distillates fell by 43,000 barrels per day to 77,000 barrels per day....But with 40 inventory increases over the past seventy-four weeks, our distillates supplies at the end of the week were still 7.1% above the 106,063,000 barrels of distillates that we had in storage on October 14th of 2022, but were also about 12% below the five year average of our distillates inventories for this time of the year...
Finally, with our oil imports lower and our oil exports higher, our commercial supplies of crude oil in storage fell for the 18th time in twenty-six weeks and for the 27th time in the past year, decreasing by 4,491,000 barrels over the week, from 424,239,000 barrels on October 6th to 419,748,000 barrels on October 13th, after our commercial crude supplies had increased by 10,176,000 barrels over the prior week. With this week's decrease, our commercial crude oil inventories were about 5% below the most recent five-year average of commercial oil supplies for this time of year, but were still about 26% above the average of our available crude oil stocks as of the first weekend of October over the 5 years at the beginning of the past decade, with the big difference between those comparisons arising because it wasn’t until early 2015 that our oil inventories had first topped 400 million barrels. After our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, but then fell in the wake of the Ukraine war, only to jump again following the Christmas 2022 refinery freeze offs, our commercial crude supplies as of this October 13th were 4.0% less than the 437,357,000 barrels of oil in commercial storage on October 14th of 2022, were 1.6% less than the 426,544,000 barrels of oil that we still had in storage on October 15th of 2021, and were 14.0% less than the 488,107,000 barrels of oil we had in commercial storage on October 16th of 2020, after early pandemic precautions had left a lot of oil unused…
Week's Rig Count
in lieu of our usual detailed rig count coverage, we are again just including below a screenshot of the rig count summary pdf from Baker Hughes...in the table below, the first column shows the active rig count as of October 20th, the second column shows the change in the number of working rigs between last week’s count (October 13th) and this week’s (October 20th) count, the third column shows last week’s October 13th 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 21st of October, 2022...
DUC well report for September
The past week saw the release of the EIA's Drilling Productivity Report for October, which included the EIA's September data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)....that data showed a decrease in uncompleted wells nationally for the 36th time out of the past 39 months, as both drilling of new wells and completions of drilled wells fell in September and remained well below the average pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 54 wells, falling from a revised 4,735 DUC wells in August to 4,681 DUC wells in September, which was also 8.3% fewer DUCs than the 5,102 wells that had been drilled but remained uncompleted as of the end of September of a year ago...this month's DUC decrease occurred as 865 wells were drilled in the seven regions that this report covers (representing 87% of all U.S. onshore drilling operations) during September, down by 29 from the 894 wells that were drilled in August, while 919 wells were completed and brought into production by fracking them, down from the 942 well completions seen in August, and down by 109 from the 1028 completions seen in September of last year....at the September completion rate, the 4,681 drilled but uncompleted wells remaining at the end of the month represents a 5.1 month backlog of wells that have been drilled but are not yet fracked, unchanged from the DUC well backlog of a month ago, while up from the 7 1/2 year low of 4.6 months in January, on a completion rate that is now more than 20% below 2019's pre-pandemic average...
the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, decreased by 9 wells, from 755 DUCs at the end of August to 746 DUCs at the end of September, as 77 new wells were drilled into the Marcellus and Utica shales during the month, while 86 of the already drilled wells in the region were fracked...
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Note: there’s more here..
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