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, July 14, 2019

OPEC report shows summer demand exceeding supply by 2 million barrels per day; US rig count falls to 17 month low..

oil prices jumped to a six week high midweek as tropical storm Barry meandered thru the Gulf and forced the shut in of over half of US offshore production....after falling 1.6% to $57.51 a barrel after the OPEC output cut extension disappointed oil traders last week, prices for US crude for August delivery initially jumped nearly 2% on Monday on confirmation that Iran had breached the limit on enriched uranium set by the 2015 accord that had been abrogated by the US, but later pulled back to end with an increase of only 15 cents at 57.66 a barrel, as gains were limited by renewed concerns about a slowing global economy...prices again rose to as high as $59.10 a barrel on Iran tensions early Tuesday, but again fell back to end with a gain of just 17 cents at $57.83 a barrel as concerns over a slowdown in energy demand again kept prices in check...oil prices again opened more than 1% higher on Wednesday after the API had reported that U.S. crude supplies had fallen for a fourth week in a row, but then extended those gains after the EIA confirmed an even larger oil inventory drop and as major producers cut nearly a third of offshore Gulf production, with oil prices finishing $2.60, or 4.5% higher at $60.43 a barrel...the Gulf of Mexico storm and Iran tensions pushed prices to another six-week high at $60.94 a barrel on Thursday before prices fell back to close 23 cents lower at $60.20 a barrel, as OPEC forecast lower demand for its crude oil next year as the U.S. & others lifted production...oil prices rose back to near six-week highs on Friday morning, as Gulf of Mexico oil producers cut more than half their output in the face of tropical storm Barry, but faded again in the afternoon to end just a penny higher at $60.21 a barrel, as concerns over a global crude surplus in the months ahead again limited gains...nonetheless, oil prices still ended nearly 5% higher for the week, as falling inventories, the tropical storm and geopolitical tensions all worked to push prices higher..

natural gas prices also ended higher, as weather forecasts shifted to show widespread heat dominating the Midwest and East over the next couple of weeks, and expectations that hurricane Barry would impact production also pushed prices higher...after finishing the prior week nearly 5% higher at $2.418 per mmBTU, natural gas for August delivery first slipped 1.5 cents on Monday, then rose 2.2 cents on Tuesday and 1.9 cents on Wednesday as the 8 to 14 day forecasts heated up, before falling 2.8 cents on Thursday after the EIA's natural gas storage report showed no surprises....prices then rose 3.7 cents on Friday with Barry bearing down to end the week at $2.453 per mmBTU, 1.4% higher than the prior week's close...

the natural gas storage report for the week ending July 5th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 81 billion cubic feet to 2,471 billion cubic feet by the end of the week, which meant our gas supplies were 275 billion cubic feet, or 12.5% more than the 2,196 billion cubic feet that were in storage on July 6th of last year, while still 142 billion cubic feet, or 5.4% below the five-year average of 2,613 billion cubic feet of natural gas that have been in storage as of the 5th of July in recent years....this week's 81 billion cubic feet injection into US natural gas storage was in line with expectations of an 80 billion cubic feet injection into storage, but was still higher than the average 71 billion cubic feet of natural gas that have been added to gas storage during the first week of July in recent years, the 17th consecutive such above average ​storage change....the 1,283 billion cubic feet of natural gas that have been added to storage over the past 15 weeks has been the largest injection of gas into storage on record for any similar period of the injection season, as the 1,128 billion cubic feet that were added during the same 15 weeks of 2014 (when June was also unusually cool) is the only year that's even close...

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on changes over the week ending July 5th, indicated that a larger than expected withdrawal of oil from our stored crude supplies, the 7th withdrawal in 15 weeks, ​resulted in a major shift in unaccounted for crude from the supply side of the balance sheet to the demand side...our imports of crude oil fell by an average of 284,000 barrels per day to an average of 7,302,000 barrels per day, after rising by an average of 920,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 58,000 barrels per day to 3,048,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,254,000 barrels of per day during the week ending July 5th, 342,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day higher at 12,300,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,554,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly using 17,438,000 barrels of crude per day during the week ending July 5th, 148,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that an average of 1,357,000 barrels of oil per day w​as being withdrawn from the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 472,000 barrels per day more than what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (-472,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil"...since the prior week's unaccounted for crude was at +350,000 barrels per day, indicating unaccounted for supply, the week over week metrics we've just reported are undependable to the tune of 812,000 barrels per day..(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to an average of 7,253,000 barrels per day last week,​ ​12.3% less than the 8,271,000 barrel per day average that we were importing over the same four-week period last year...the 1,357,000 barrel per day decrease in our total crude inventories was all pulled out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day higher at 12,200,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,900,000 barrels per day, while Alaska's oil production was statistically unchanged at 426,000 barrels per day....last year's US crude oil production for the week ending July 6th was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was roughly 12.8% above that of a year ago, and 45.9% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 94.7% of their capacity in using 17,438,000 barrels of crude per day during the week ending July 5th, up from 94.2% of capacity the prior week, and a fairly normal refinery utilization rate for this time of year....however, the 17,438,000 barrels per day of oil that were refined this week were still 1.2% below the 17,652,000 barrels of crude per day that were being processed during the week ending July 6th, 2018, when US refineries were operating at 96.7% of capacity....

with the increase in the amount of oil being refined, gasoline output from our refineries was much higher, increasing by 470,000 barrels per day to 10,418,000 barrels per day during the week ending July 5th, after our refineries' gasoline output had inexplicably decreased by 564,000 barrels per day the prior week....but even with that large jump in gasoline output, this week's gasoline production was still 2.6% less than the record 10,699,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 22,000 barrels per day to 5,358,000 barrels per day, after our distillates output had increased by 31,000 barrels per day the prior week....and even with this week's increase, the week's distillates production was still 1.5% less than the 5,442,000 barrels of distillates per day that were being produced during the week ending July 6th, 2018.... 

even with the big increase in gasoline production, our supply of gasoline in storage at the end of the week fell for the 4th week in a row and for the 16th time in twenty weeks, decreasing by 1,455,000 barrels to 229,187,000 barrels over the week to July 5th, after our gasoline supplies had decreased by 1,583,000 barrels over the prior week....our gasoline supplies continued to fall because the amount of gasoline supplied to US markets increased by 262,000 barrels per day to 9,754,000 barrels per day, and because our exports of gasoline rose by 137,000 barrels per day to 700,000 barrels per day, even while our imports of gasoline rose by 335,000 barrels per day to 871,000 barrels per day...after our gasoline supplies had reached an all time record high twenty-two weeks ago, they then fell by nearly 13% over the next 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, and hence they are still 4.1% lower than last July 6th's inventory level of 238,997,000 barrels, while slumping back to near the five year average of our gasoline supplies at this time of the year...

with the increase in our distillates production, our supplies of distillate fuels rose for the 6th time in the past 17 weeks, increasing by 3,729,000 barrels to 130,517,000 barrels during the week ending July 5th, after our distillates supplies had increased by 1,408,000 barrels over the prior week...our distillates supplies jumped this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 277,000 barrels per day to 3,551,000 barrels per day, and because our imports of distillates rose by 83,000 barrels per day to 181,000 barrels per day, while our exports of distillates rose by 50,000 barrels per day to 1,455,000 barrels per day...after this week's inventory increase, our distillate supplies were 7.3% higher than the 121,682,000 barrels of distillate that we had stored on July 6th, 2018, even as they remained 5% below the five year average of distillates stocks for this time of the year...

finally, with lower oil imports and greater refinery throughput, our commercial supplies of crude oil in storage fell for a fourth week in a row and for the tenth time in 25 weeks, decreasing by 9,499,000 barrels, from 468,491,000 barrels on June 28th to 458,992,000 barrels on July 5th...but even with that decrease, our crude oil inventories remained roughly 4% above the recent five-year average of crude oil supplies for this time of year, and roughly 35% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the end of June, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising this year, & since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of July 5th were still 13.2% above the 405,248,000 barrels of oil we had stored on July 6th of 2018, but at the same time were 7.3% below the 495,350,000 barrels of oil that we had in storage on July 7th of 2017, and 7.0% below the 493,718,000 barrels of oil we had stored on July 8th of 2016...   

OPEC's Monthly Oil Market Report

next we're going to review OPEC's July Oil Market Report (covering June OPEC & global oil data), which was released on Thursday of this past week and is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 63 of that report (pdf page 73), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a​ means of​ impartial​ly​ adjudicat​ing whether their output quotas and production cuts are being met, to thus avert any potential disputes that could arise if each member reported their own figures...

June 2019 OPEC crude output via secondary sources

so, as we can see from this table of oil production data, OPEC's oil output fell by 68,000 barrels per day to 29,830,000 barrels per day in June, from their revised May production total of 29,898,000 barrels per day...however that May figure was originally reported as 29,876,000 barrels per day, so that means their production for June was really a 46,000 barrel per day decrease from the previously reported figures (for your reference, here is the table of the official May OPEC output figures as reported a month ago, before this month's revisions)...

the largely involuntary Iranian output ​reduction of 142,000 barrels per day due to US sanctions on their exports was the primary reason for the cartel's output cut in June, as relatively smaller production cuts by Angola, by Iraq, by Kuwait, by Algeria and by Libya were more than offset by increases in output from Nigeria and the Saudis...​however, that 129,000 barrels per day increase in the output from Nigeria that you see above now puts them well over the output allocations originally ​determined for each member after their December 7th, 2018 meeting, when OPEC agreed to cut 800,000 barrels per day as part of a 1.2 million barrel per day cut agreed to with Russia and other oil producers, and which were extended at their July 1st meeting a few weeks back...in addition, despite the small June decrease in output from Iraq, their output also remains ​well ​above quota, as can be seen in the table of OPEC production allocations we've included below:

February 6 2019 Platts on OPEC allocations

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

the next graphic from the report that we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from July 2017 to June 2019, and it comes from page 64 (pdf page 74) of the July OPEC Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale... 

June 2019 OPEC report global oil supply

despite the decrease in OPEC's production from what they reported a month ago, their preliminary estimate indicates that total global oil production still rose by 0.47 million barrels per day to 98.56 million barrels per day in June,​ an increase ​that ​came after May's total global output figure was revised down by 170,000 barrels per day from the 98.26 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 540,000 barrels per day in June after that revision, with higher oil output from the US, Brazil, Kazakhstan, Russia and China the major reasons for the non-OPEC production increase.... the 98.56 million barrels per day produced globally in June was still 0.71 million barrels per day, or 0.7% higher than the revised 97.85 million barrels of oil per day that were being produced globally in June a year ago (see the July 2018 OPEC report (online pdf) for the originally reported June 2018 details)...with the decrease in OPEC's output, their June oil production of 29,830,000 barrels per day slipped to 30.3% of what was produced globally during the month, down from the revised 30.5% share they contributed in May....OPEC's June 2018 production was reported at 32,327,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding Qatar from last year's total and new member Congo from this year's, are now producing 2,225,000 fewer barrels per day of oil than they were producing a year ago, when they accounted for 33.0% of global output, with a 1,575,000 barrel per day drop in output from Iran, a 607,000 barrel per day decrease in the output from Saudi Arabia, and a 606,000 barrel per day decrease in the output from Venezuela from that time more than offsetting the year over year production increases of 405,000 barrels per day from Libya, 185,000 barrels per day from Iraq, and 186,000 barrels per day from the Emirates...  

despite the 470,000 barrels per day increase in global oil output that was seen during June, there was still a large ​shortfall in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...   

June 2019 OPEC report global oil demand

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

OPEC has estimated that during the 2nd quarter of this year, all oil consuming regions of the globe have been using 99.24 million barrels of oil per day, which was unrevised from their estimate for the 2nd quarter a month ago....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were ​still ​only producing 98.56 million barrels per day during June, which means that there was a shortfall of around 680,000 barrels per day in global oil production when compared to the demand estimated for the month...

in addition, the downward revision of 170,000 barrels per day to May's global output that's implied in this report means that the 980,000 barrels per day shortfall that we had​ originally​ figured for May based on last month's figures would ​now ​have to be revised to a deficit of 1,150,000 barrels per day during May....combined with ​the deficit of 1,020,000 barrels per day that we had previously figured for April, that means that for the 2nd quarter of 2019, global oil production has been running around 950,000 barrels per day short of what's need to cover demand....while those deficits follow a first quarter that saw surpluses of 550,000 barrels per day for January, 640,000 barrels per day in February, and 190,000 barrels per day for March, note that in the 4th column above, global demand during the 3rd quarter, or summertime in the northern hemisphere, is expected to increase by 1,370,000 barrels per day to 100.61 million barrels of oil per day...that means that unless there is an unexpected pickup in oil production from the non-OPEC countries, the third quarter will be seeing oil output deficits near or above 2 million barrels of oil per day, or ​roughly 2%​ of ​total demand....

This Week's Rig Count

the US rig count fell for the 18th time in 21 weeks during the week ending July 12th, and is now down by 11.5% for the year....Baker Hughes reported that the total count of rotary rigs running in the US fell by 5 rigs to a 17 month low of 958 rigs this past week, which was also down by 96 rigs from the 1054 rigs that were in use as of the July 13th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil fell by 4 rigs to 784 rigs this week, which was also 79 fewer oil rigs than were running a year ago, and less than half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 2 rigs to 172 natural gas rigs, which was also down by 17 rigs from the 189 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on August 29th, 2008...however, another rig classified as miscellaneous was ​began drilling this week and hence there are now two such active, matching the "miscellaneous rig" count of a year ago...

the rig count in the Gulf of Mexico increased by 2 to 26 rigs this week, as two more rigs began drilling off the coast of Louisiana...that means there are now 24 rigs drilling offshore from Louisiana and 2 rigs deployed offshore from Texas, an increase of 7 offshore rigs from the 19 rigs that were deployed in the Gulf in the same week a year ago, when 17 rigs were drilling in Louisiana waters and two were deployed offshore from Texas...on the other hand, one of the 3 platforms that had been drilling through inland waters in ​southern ​Louisiana was shut down this week, leaving two​ still active​, down from the 5 "inland waters" rigs that were drilling in Louisiana on July 13th 2018...

the count of active horizontal drilling rigs was down by 8 to 831 horizontal rigs this week, which was the least horizontal rigs deployed since February 9th, 2018 and hence a new 17 month low for horizontal drilling...it was also 99 fewer horizontal rigs than the 930 horizontal rigs that were in use in the US on July 13th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count was down by 1 rig to 57 vertical rigs this week, but those were still up ​by 1 ​from the 56 vertical rigs that were operating during the same week of last year....on the other hand, the directional rig count was up by 4 rigs to 70 directional rigs this week, and those were also up from the 68 directional rigs that were in use on July 13th of 2018...

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of July 12th, the second column shows the change in the number of working rigs between last week's count (July 5th) and this week's (July 12th) count, the third column shows last week's July 5th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 6th of July, 2018...    

July 12 2019 rig count summary

as you can see, this week's rig reductions were concentrated in Texas, in both the Eagle Ford and the Permian basins within Texas...in the Permian, 3 horizontal rigs were pulled out of Texas Oil District 8, which would be the core Permian Delaware, and 3 more were pulled out of Texas Oil District 7C, or the southern Permian Midland...meanwhile, 4 oil rigs and one targeting natural gas were pulled out of the Eagle Ford of southeast Texas, which left 60 oil rigs and 6 natural gas rigs still active in that basin...at the same time, oil targeting rigs were added in the Cana Woodford of central Oklahoma and the DJ Niobrara chalk of the Rockies front range, while a natural gas rig was added in the Haynesville on the Texas side of the border, as the northern Louisiana rig count was unchanged while Texas Oil District 6 saw a one rig increase...meanwhile, two more natural gas rigs were shut down in "other" basins not tracked separately by Baker Hughes...

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note: there's more here...

Sunday, July 7, 2019

coolest June in 15 years contributes to largest spring natural gas storage injection on record..

oil prices fell for the first time in three weeks as oil traders "sold on the news" that OPEC + Russia had agreed to extend their production cuts for another 9 months, through March of 2020...after rising 2% to $58.47 a barrel on a big drop in US crude supplies last week, the price of US WTI crude for August delivery opened 80 cents higher and traded above $60 for the first time in over 5 weeks on Monday morning after Saudi Arabia, Russia and Iraq all backed an extension of supply cuts ahead of the OPEC meeting in Vienna, but gave up a substantial portion of its early gains in the afternoon to close up just 62 cents, or 1.1%, at $59.09 a barrel...after opening higher on Tuesday, oil prices resumed their late Monday selloff on worries that a weakening global economy would dent demand outweighed the OPEC supply cuts, and then plunged sharply after the pre-OPEC decision price level was breached to end down $2.84, or 4.8%, to $56.25 a barrel on the sense that the OPEC pact was the bare minimum they could have done to control supplies...oil prices recovered part of those losses on Wednesday, first on an API report of a larger-than-expected in U.S. crude oil inventories, and then on a rally in equities and a drop in the oil rig count, with prices finishing $1.09 higher at $57.34 a barrel...oil prices were lower in overseas trading on the 4th of July holiday and that price weakness carried into early US trading Friday, but prices later rose after Iran threatened to seize a British ship after British forces had seized an Iranian tanker in Gibraltar, and closed 17 cents higher at $57.51 a barrel...but despite those gains late in the week, the Tuesday selloff still left prices down 1.6% on the week, following increases over the prior two weeks...

natural gas prices, meanwhile, rose for a second week, as a notably hotter shift in the weather pattern drove out the shorts and promised to increase power burn demand...natural gas for August delivery initially fell 4.1 cents to $2.267 per mmBTU on Monday, as June had finished as the coolest since 2004, and then slipped another 2.7 cents on Tuesday before rising 5 cents on Wednesday with the early release of the natural gas storage report, and then rising 12.8 cents, or nearly 5% to $2.418 per mmBTU on Friday as a broad upper level ridge set up over the central and eastern U.S. and was expected to produce above-average temperatures going well into next week...

the natural gas storage report from the EIA for the week ending June 28th indicated that the quantity of natural gas held in storage in the US increased by 89 billion cubic feet to 2,390  billion cubic feet by the end of the week, which meant our gas supplies were 249 billion cubic feet, or 11.6% more than the 2,141 billion cubic feet that were in storage on June 28th of last year, while still 152 billion cubic feet, or 6.0% below the five-year average of 2,542 billion cubic feet of natural gas that have been in storage after the fourth week of June in recent years....this week's 89 billion cubic feet injection into US natural gas storage was higher than the average consensus estimate for a 79 billion cubic feet injection in an S&P Global Platts survey, and was much higher than the average 70 billion cubic feet of natural gas that have been added to gas storage during the fourth week of June in recent years, the 16th consecutive such above average injection....the 1,283 billion cubic feet of natural gas that have been added to storage over the past 14 weeks has been the largest injection of gas into storage on record for any similar period of the injection season, as the 1,033 billion cubic feet that were added during the same 14 weeks of 2014 (when June was also unusually cool) is the only year that even appears close...as you know, we've been calling this injection pace record setting and unprecedented for several weeks now, and this week the EIA finally jumped on the bandwagon with a blog post saying the same thing, albeit without the first injection in late March that we've been including in our seasonal totals...

we'll include the latest temperature anomaly map from the EIA's natural gas storage dashboard as a preliminary image before showing you a bar graph on natural gas weighted degree days for June, which have contributed to that record setting pace...

July 6th 2019 temperature anomalies thru June 27

as you can see, the above map color-codes the temperature anomalies over the lower 48 states for the week ending June 27th, and with a preponderance of blue coloring, we can tell that most of the US except for the southeast saw below normal temperatures for the week in question.... several times over the past six months​, ​we've included​ a copy of​ the weekly update of this temperature map as a means of indicating the influence that above or below temperatures had on natural gas consumption, and hence on the amount of natural gas left in storage...while everyone probably understands that below normal temperature for the last week of June would mean less use of air conditioning, the implications of such a map haven't been quite so clear earlier in the year, when the northern parts of the country may still have been heating their homes while the southern tier of states might be turning on the air conditioning at the same time....utilities and traders in natural gas follow a much more precise metric to determine the impact of temperature changes on natural gas consumption, which is shown in the bar graph below...

July 2nd 2019 JUNE_GWDD

the above graph, copied from the Monday blog post at Bespoke Weather, shows gas weighted degree days (GWDD) for the month of June from 1981 to to 2019, with 2019 on the left and the oldest years oddly on the right....gas weighted degree days, or GWDDs, are a population weighed metric which includes both heating degree days and cooling degree days in the same sum...heating degree days are a measure of how many degrees a given day​ falls below ​a average daily temperature ​at which ​it is figured that ​heating is necessary (typically 65 degrees), while cooling degree days measure how many degrees ​temperatures rise ​above ​a base average temperature whe​rein it's thought cooling ​would be necessary​ on a given day...for example, if the mean daily temperature for a northern US city is 55F, that city would have 10 heating degree days for that date; if, on the other hand, a southern US city experienced a mean temperature of 80F on that same day, that city would show 15 cooling degree days for that day...averaging the number of degrees days of either type for each​ US population center​, weighted by population, and adding them together for the 30 days of June, yields the metric shown on the bar graph above...

thus we can see that for June of 2019, the population weighted GWDDs fell short of 250 and was the lowest since 2004, meaning that the demand for natural gas for both heating and cooling during the month was the lowest in 15 years...while degree days are not an exact science, as both heating and cooling needs are determined by more than just the average outdoor temperature, they give us, and utilities, a reasonable estimate of expected demand for natural gas and electricity on a given day, and by extension, over a given period... 

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on changes over the week ending June 28th, showed that a big drop in our oil exports combined with a jump in our oil imports meant there was a much smaller withdrawal of oil from our stored crude supplies than last week, even as it was just the 6th withdrawal​ of oil​ in 14 weeks...our imports of crude oil rose by an average of 929,000 barrels per day to an average of 7,585,000 barrels per day, after falling by an average of 812,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 780,000 barrels per day to 2,990,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,595,000 barrels of per day during the week ending June 28th, 1,709,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day higher at 12,200,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,795,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly using 17,290,000 barrels of crude per day during the week ending June 28th, 47,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a​n average of 155,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 340,000 barrels per day short of what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+340,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil"...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to an average of 7,330,000 barrels per day last week, now 13.1% less than the 8,438,000 barrel per day average that we were importing over the same four-week period last year...the 155,000 barrel per day decrease in our total crude inventories was all pulled out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day higher at 12,200,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 200,000 barrels per day higher at 11,800,000 barrels per day, while a 27,000 barrel per day decrease to 427,000 barrels per day in Alaska's oil production then lowered the final rounded national total by 100,000 [sic]....last year's US crude oil production for the week ending June 22nd was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was roughly 11.9% above that of a year ago, and 44.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 94.2% of their capacity in using 17,290,000 barrels of crude per day during the week ending June 28th, unchanged from 94.2% of capacity the prior week, and a fairly normal refinery utilization rate for this time of year....however, the 17,290,000 barrels per day of oil that were refined this week were still 2.1% below the 17,653,000 barrels of crude per day that were being processed during the week ending June 29th, 2018, when US refineries were operating at 97.1% of capacity....

even with ​just a modest decrease in the amount of oil being refined, gasoline output from our refineries was much lower, decreasing by 564,000 barrels per day to 9,948,000 barrels per day during the week ending June 28th, after our refineries' gasoline output had increased by 649,000 barrels per day over the prior four weeks....with that large drop in gasoline output, this week's gasoline production was 3.5% less than the 10,311,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 31,000 barrels per day to 5,336,000 barrels per day, after our distillates output had decreased by 66,000 barrels per day the prior week....so even with this week's increase, the week's distillates production was still 2.3% less than the 5,463,000 barrels of distillates per day that were being produced during the week ending June 29th, 2018.... 

with the big drop in our gasoline production, our supply of gasoline in storage at the end of the week fell for the 3rd week in a row and for the 15th time in 19 weeks, decreasing by 1,583,000 barrels to 230,642,000 barrels over the week to June 28th, after our gasoline supplies had decreased by 996,000 barrels over the prior week...the draw from our gasoline supplies increased even though our exports of gasoline fell by 376,000 barrels per day to 563,000 barrels per day, as our imports of gasoline fell by 280,000 barrels per day to 536,000 barrels per day, while the amount of gasoline supplied to US markets increased by 26,000 barrels per day to 9,492,000 barrels per day...after our gasoline supplies had reached an all time record high twenty-one weeks ago, they then fell by nearly 13% over the next 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, and hence ​they ​are still 3.8% lower than last June 29th's inventory level of 239,691,000 barrels, ​while remain​ing​ near the five year average of our gasoline supplies at this time of the year...

with the increase in our distillates production, our supplies of distillate fuels rose for the 5th time in the past 16 weeks, increasing by 1,408,000 barrels to 126,788,000 barrels during the week ending June 28th, after our distillates supplies had decreased by 2,441,000 barrels over the prior week....our distillates supplies managed to increase this week because our exports of distillates fell by 314,000 barrels per day to 1,405,000 barrels per day and because our imports of distillates rose by 65,000 barrels per day to 98,000 barrels per day, and because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 140,000 barrels per day to 3,828,000 barrels per day....after this week's inventory increase, our distillate supplies were 7.9% higher than the 117,557,000 barrels of distillate that we had stored on June 29th, 2018, even as they remained 6% below the five year average of distillates stocks for this time of the year...

however, even with the big drop in our oil exports and a big increase in our oil imports, our commercial supplies of crude oil in storage fell for a third week in a row and for the ninth time in 24 weeks, decreasing by 1,085,000 barrels, from 469,576,000 barrels on June 21st to 468,491,000 barrels on June 28th...​but ​even with that decrease, our crude oil inventories remained roughly 5% above the recent five-year average of crude oil supplies for this time of year, and 36.3% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the end of June, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of June 28th were still 12.1% above the 417,881,000 barrels of oil we had stored on June 29th of 2018, but at the same time ​were ​6.8% below the 502,914,000 barrels of oil that we had in storage on June 30th of 2017, and 5.1% below the 493,718,000 barrels of oil we had stored on July 1st of 2016...   

This Week's Rig Count

the US rig count fell for the 17th time in 20 weeks during the week ending July 5th, after being unchanged during the prior week, and is now down by 11% so far this year....Baker Hughes reported that the total count of rotary rigs running in the US fell by 4 rigs to 963 rigs this past week, which was also down by 89 rigs from the 1052 rigs that were in use as of the July 6th report of 2018, and ​less than half of the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil fell by 5 rigs to 788 rigs this week, which was also 75 fewer oil rigs than were running a year ago, and ​quite a bit below the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 1 rig to 174 natural gas rigs, which was still down by 13 rigs from the 187 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on August 29th, 2008...in addition, a rig classified as miscellaneous continued to drill in Sandusky county Ohio this week, ​while there were 2 ​such ​"miscellaneous rig​s​" running a year ago, when Cabot Oil & Gas was drilling 2 exploratory wells into the Knox formation in Ohio...

the rig count in the Gulf of Mexico decreased by 2 to 24 rigs this week, as two rigs that had been drilling off the coast of Louisiana were shut down...that le​ft 22 rigs running offshore from Louisiana and 2 rigs deployed offshore from Texas, still up by 6 rigs from the 18 rigs that were deployed in the Gulf in the same week a year ago, when 17 rigs were drilling in Louisiana waters and one was deployed offshore from Texas...however, a year ago there was also a rig drilling offshore from Alaska, while all of this week's offshore activity was in the Gulf of Mexico...

the count of active horizontal drilling rigs was down by 1 to 839 horizontal rigs this week, which was another 16 month low for horizontal drilling and 91 fewer horizontal rigs than the 930 horizontal rigs that were in use in the US on July 6th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the directional rig count was down by 2 rigs to 66 directional rigs this week, and those were down a rig from the 67 directional rigs that were operating during the same week of last year....at the same time, the vertical rig count was down by 1 rig to 58 vertical rigs this week, but those were still up from the 55 vertical rigs that that were in use on July 6th of 2018...

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of July 5th, the second column shows the change in the number of working rigs between last week's count (June 28th) and this week's (July 5th) count, the third column shows last week's June 28th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 6th of July, 2018...     

July 5th 2019 rig count summary

the 4 rig decrease in Louisiana is pretty straightforward; 2 of those were pulled out of the Gulf, while another 2 came out of the Haynesville shale in the northwest quarter of the state...for the 5 rig decrease in Oklahoma, however, there were 4 oil rigs pulled out of the Cana Woodford, while 2 rigs began drillig for natural gas in the same basin, ​in ​the first drilling for natural gas in the Cana Woodford since March of 2018...hence, three more Oklahoma rigs were shut down in basins not tracked separately by Baker Hughes​ which are not shown above​...for New Mexico, it appears that all three rigs were added in the Permian, because 2 horizontal rigs were pulled out of Texas Oil District 8, which would be the core Permian Delaware, while Texas Oil District 7C, ​or ​the southern Permian Midland​,​ saw one rig start up, so for the Permian to show a two rig increase, three had to have been added in New Mexico...this week's natural gas drilling nets out pretty easily too; while two natural gas rigs were shut down in Louisiana's Haynesville, two were started up in the Cana Woodford, and another one began drilling in West Virginia's Marcellus..

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note: there's more here...

Sunday, June 30, 2019

record US oil exports; largest draw on crude supplies in 33 months; horizontal rigs at 16 mo low, vertical rigs at 4 mo hi

oil prices rose for a second week on ongoing hostilities between the US and Iran and the largest drawdown of US crude inventories in nearly 3 years, while oil traders held back awaiting the outcome of the Trump-Xi summit in Japan this weekend and the OPEC meeting next week...after jumping nearly 9% to $57.43 a barrel last week after Iran shot down a US spy drone which had ventured into its airspace, the price of US crude for August delivery opened higher and rose to $58.22 a barrel on Monday after Trump questioned the need for the US to defend the Straight of Hormuz, but the gains were capped on worries over weakening demand as oil prices settled with a gain of 47 cents at $57.90 a barrel...oil prices hung in a narrow range on Tuesday as concerns over declining crude demand were offset by risks linked to new U.S. sanctions targeting Iranian leaders, with prices settling 7 cents lower at $57.83 a barrel...however, oil prices opened more than a dollar higher on Wednesday on word of a permanent closure of major East Coast refinery and on industry data that showed U.S. crude stockpiles fell more than expected and then spiked up another dollar after the EIA reported the largest oil inventory withdrawal in nearly 3 years, before settling to close $1.55 higher at $59.38, with both oil & gasoline futures posting their highest settlements in 5 weeks...oil prices started out lower on Thursday, pressured by doubts that the G20 summit could produce a breakthrough on trade, and on perceptions that oil supply is ample despite the prospect of continued OPEC curbs, but then turned higher in the afternoon and managed to eke out a new multiweek high at $59.43 a barrel, as traders weighed tensions between the U.S. and Iran that threatened global supplies...oil prices were trending higher again on Friday, but then fell sharply just before the close as the other parties to the Iran nuclear deal vowed to forgo dollar based oil pricing to normalize trade with Iran, with oil finishing down 96 cents, or 1.6%, at $58.47 a barrel...but despite Friday's drop, oil prices still posted their second straight weekly gain while waiting for the G20 and OPEC talks, and finished with a gain more than 9% for the month of June, their fifth monthly gain this year, even after falling 16% during May...

meanwhile, natural gas prices rose from last week's three year low, as 15 day forecasts for hotter weather lifted prices for both the July natural gas contract and for August natural gas by more than 11 cents on Monday, and then the August contract tacked on another 5.6 cents on Thursday after the natural gas storage report showed a slightly lower than expected addition to storage over the previous week...the contract for July natural gas, which had ended last week more than 8% lower at $2.186 per mmBTU, rose 10.5 cents before trading in that contract expired at $2.291 per mmBTU on Wednesday, marking the lowest final monthly settlement for a natural gas contract since the June settlement of 2016, while the contract for August natural gas, which had fallen to $2.169 per mmBTU last week, rose 6.4% to end the week at $2.308 per mmBTU...

the natural gas storage report from the EIA for the week ending June 21st showed that the quantity of natural gas held in storage in the US increased by 98 billion cubic feet to 2,301 billion cubic feet by the end of the week, which meant our gas supplies were 236 billion cubic feet, or 11.4% more than the 2,065 billion cubic feet that were in storage on June 22nd of last year, while still 171 billion cubic feet, or 6.9% below the five-year average of 2,472 billion cubic feet of natural gas that have been in storage after the third week of June in recent years....this week's 98 billion cubic feet injection into US natural gas storage was was a little short of the average consensus estimate for a 101 billion cubic feet injection, but was still much higher than the average 70 billion cubic feet of natural gas that have been added to gas storage during the third week of June in recent years, the 15th consecutive such above average injection....the 1,194 billion cubic feet of natural gas that have been added to storage over the past 13 weeks has been the largest injection of gas into storage on record for any similar period of the injection season, as the 934 billion cubic feet that were added during the same 13 weeks of 2014 (when June was also unusually cool) is the only year that even appears close...

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on changes over the week ending June 21st, showed that a big drop in our oil imports combined with record exports of domestic crude meant that we saw the largest withdrawal of oil from our stored crude supplies in nearly three years, even as it was just  the 5th withdrawal in 14 weeks...our imports of crude oil fell by an average of 812,000 barrels per day to an average of 6,656,000 barrels per day, after falling by an average of 144,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 348,000 barrels per day to a record 3,770,000 barrels per day during the week (shown below), which meant that our effective trade in oil worked out to a net import average of 2,886,000 barrels of per day during the week ending June 21st, 1,160,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day lower at 12,100,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 14,986,000 barrels per day during this reporting week...

June 26 2019 crude exports thru June 21 (source)

meanwhile, US oil refineries were reportedly using 17,337,000 barrels of crude per day during the week ending June 21st, 73,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 1,827,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 525,000 barrels per day short of what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+525,000) 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"....with that much oil unaccounted for, we have to figure that one or more of this week's crude oil metrics are again off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to an average of 7,415,000 barrels per day last week, now 10.2% less than the 8,261,000 barrel per day average that we were importing over the same four-week period last year...the 1,827,000 barrel per day decrease in our total crude inventories was all pulled out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day lower at 12,100,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,600,000 barrels per day, while a 8,000 barrel per day increase to 474,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national total....last year's US crude oil production for the week ending June 22nd was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was roughly 11.0% above that of a year ago, and 43.6% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 94.2% of their capacity in using 17,337,000 barrels of crude per day during the week ending June 21st, up from 93.9% of capacity the prior week, and a fairly normal refinery utilization rate for this time of year....however, the 17,337,000 barrels per day of oil that were refined this week were still 2.7% below the 17,816,000 barrels of crude per day that were being processed during the week ending June 22nd, 2018, when US refineries were operating at 97.5% of capacity....

with the increase in the amount of oil being refined, gasoline output from our refineries was similarly higher, increasing by 89,000 barrels per day to 10,512,000 barrels per day during the week ending June 21st, after our refineries' gasoline output had increased by 147,000 barrels per day the prior week....after 4 consecutive weekly increases in gasoline output, this week's gasoline production was 3.6% more than the 10,142,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 66.000 barrels per day to 5,305,000 barrels per day, after our distillates output had increased by 132,000 barrels per day the prior week....with this week's decrease, the week's distillates production was 1.7% less than the 5,396,000 barrels of distillates per day that were being produced during the week ending June 22nd, 2018.... 

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell for the 2nd time in 6 weeks and for the 14th time in 18 weeks, decreasing by 996,000 barrels to 232,225,000 barrels over the week to June 21st, after our gasoline supplies had decreased by 1,692,000 barrels over the prior week...that smaller draw from our gasoline supplies was because the amount of gasoline supplied to US markets decreased by 642,000 barrels per day from last week's record high to 9,466,000 barrels per day, while our exports of gasoline rose by 309,000 barrels per day to 939,000 barrels per day, while our imports of gasoline fell by 21,000 barrels per day to 816,000 barrels per day....after our gasoline supplies had reached an all time record high twenty weeks ago, they then fell by nearly 13% over 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, and hence are still 3.7% lower than last June 22nd's inventory level of 241,196,000 barrels, and back to near the five year average of our gasoline supplies at this time of the year...

with the decrease in our distillates production, our supplies of distillate fuels fell for the 11th time in 15 weeks, decreasing by 2,441,000 barrels to 125,380,000 barrels during the week ending June 21st, after our distillates supplies had decreased by 551,000 barrels over the prior week....our distillates supplies fell by more this week than last because our exports of distillates rose by 166,000 barrels per day to 1,719,000 barrels per day and because our imports of distillates fell by 132,000 barrels per day to 33,000 barrels per day, while the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 93,000 barrels per day to 3,968,000 barrels per day....but even after this week's inventory decrease, our distillate supplies were still 6.8% higher than the 117,423,000 barrels of distillate that we had stored on June 22nd, 2018, even as they fell to 7% below the five year average of distillates stocks for this time of the year...

finally, with record oil exports and that big drop in our oil imports, our commercial supplies of crude oil in storage fell for the eighth time in 23 weeks and by the most since Sept 2nd, 2016, decreasing by 12,788,000 barrels, from 482,364,000 barrels on June 14th to 469,576,000 barrels on June 21st...with that decrease, our crude oil inventories fell to 5% above the recent five-year average of crude oil supplies for this time of year, but still remained about 35% higher than the prior 5 year (2009 - 2013) average of crude oil stocks after the third week of June, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of June 21st were still 12.7% above the 416,636,000 barrels of oil we had stored on June 22nd, of 2018, but at the same time 7.8% below the 509,213,000 barrels of oil that we had in storage on June 23rd of 2017, and 5.3% below the 495,941,000 barrels of oil we had stored on June 24th of 2016...    

since this week's crude inventory withdrawal was the largest in nearly three years, and since supplies of gasoline and distillates were concurrently drawn down, we'll include a set of bar graphs of the historical changes in each of them to show you what the recent changes look like graphically...this set of inventory bar graphs was copied from the Zero Hedge post of this past week that reviewed the weekly EIA report:

June 28 2019 inventories as of June 21

above we have 4 similar bar graphs stacked one on top of another; from the top, the first graph shows the weekly change in US crude oil inventories over the last 3 and a half years, the second graph shows the weekly change in oil inventories at the Cushing Oklahoma storage depot, the basis for WTI oil contracts; the third graph shows the weekly change in gasoline inventories over the same period, while the bottom graph shows the weekly change in inventories of distillates...each graph has the same format: inventory increases for a given week are shown as a green bar above the zero line, whereas inventory decreases are shown as a red bar pointing down from the zero line, wherein the size of the bar in both cases is indicative of the size of the inventory increase or decrease...in addition, note that on the top graph ​for crude ​oil ​inventories, Zero Hedge has included a heavy dashed red line from this week's increase back in time to September 2nd, 2016, the only time on this graph that the red bar, marking the decrease in crude supplies, was greater than this week's decrease... however, even though this week's withdrawal from stored supplies was large by historical standards, it is somewhat of an outlier compared to recent experience, wherein we've been seeing additions to inventories more often than not, which you can see on the graph as a preponderance of green bars pointing upwards going back to September of last year....

the opposite is largely true for the gasoline inventory graph (3rd from the top) and the distillates inventory graph on the bottom, as you can see that the majority of recent weeks for both have red bars pointing down, indicating falling supplies...but note that both had large increases in the first weeks of the year, before the sanctions on Venezuelan crude kicked in and reduced the throughput of US refineries by 10%, as Gulf Coast refiners scrambled for weeks ​​to find equivalent grades of the heavy sour crude that they were designed to process...the two graphs thus clearly show the unintended ​consequences ​​of policy decisions made on the spur of the moment at the urging of the most reprobate of US officials and politicians​ on our own domestic energy supplies​...

This Week's Rig Count

the US rig count was unchanged over the week ending June 28th and hence matched the 16 month low of the prior week, when the rig count had fallen for the 16th time in eighteen weeks...Baker Hughes reported that the total count of rotary rigs running in the US remained at 967 rigs this past week, which was still down by 80 rigs from the 1047 rigs that were in use as of the June 29th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil rose by 4 rigs to 793 rigs this week, which was still 65 fewer oil rigs than were running a year ago, and less than half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 4 rigs to 173 natural gas rigs, which was also down by 14 rigs from the 187 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on August 29th, 2008...in addition, there was also a rig classified as miscellaneous operating this week, which was down from the 2 miscellaneous rigs that were running a year ago, when Cabot Oil & Gas was drilling 2 exploratory wells into the Knox formation in Ohio that Baker Hughes had labeled as miscellaneous...

the rig count in the Gulf of Mexico increased by 2 to 26 rigs this week, as two more rigs began operations off the coast of Louisiana...the Gulf rig deployment now includes 24 rigs running offshore from Louisiana and 2 rigs deployed offshore from Texas, an increase ​of​ 8 ​​rig​s ​from the 18 rigs that were deployed in the Gulf in the same week a year ago, when 17 rigs were drilling in Louisiana waters and one was deployed offshore from Texas...however, a year ago there was also a rig drilling offshore from Alaska, while all of this week's offshore activity was in the Gulf of Mexico...meanwhile, one of the so-called "inland waters" rigs which had been operating in southern Louisiana was also shut down this week, leaving three rigs still deployed on inland waters in the state, down from the 4 inland waters rigs that were operating in Louisiana a year ago...​​

the count of active horizontal drilling rigs was down by 6 to 840 horizontal rigs this week, which was a new 16 month low for horizontal drilling and 86 fewer horizontal rigs than the 926 horizontal rigs that were in use in the US on June 29th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was unchanged at 68 directional rigs this week, but those were up by 3 rigs from the 65 directional rigs that were operating during the same week of last year....on the other hand, the vertical rig count was up by 6 rigs to​ 59 vertical rigs this week, and those were also up from the 56 vertical rigs that that were in use on June 29th of 2018...hard to say if it's a significant development yet, but over the past three weeks, 15 horizontal rigs have been shut down, while 13 new vertical rigs have started drilling, pushing the vertical rig count to a 4 month high....

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of June 28th, the second column shows the change in the number of working rigs between last week's count (June 21st) and this week's (June 28th) count, the third column shows last week's June 21st active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 29th of June, 2018...     

June 28 2019 rig count summary

this week's tables are obviously missing some information, since the major basin variances shown above total a net decrease of two, while we know from the summary that horizontal rigs were down by six....based on the state totals, we might guess that two of them might have been drilling in Alaska, while another two horizontal rigs might have been pulled out of a basin in Oklahoma or Texas not shown above...in Texas, 3 horizontal rigs were added in Texas Oil District 8, which would be the core Permian Delaware, while the rig counts in the other Permian districts were unchanged, which means that the rig that was shut down in New Mexico must have been drilling in the western Permian Delaware...elsewhere in Texas, two rigs were pulled out of the Eagle Ford, one each ​drilling for oil and​ for​ natural gas, leaving the Eagle Ford with 64 oil rigs and 7 targeting natural gas, while the 2 oil rigs pulled out of the Granite Wash were both targeting natural gas, and they were in Oklahoma, since drilling in the Texas Panhandle Oil District 10 was unchanged...meanwhile, the fourth natural gas rig that was shut down this week came out of an "other' basin not tracked separately by Baker Hughes..

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note: there's more here...

Sunday, June 23, 2019

oil prices up most in 30 months; natural gas prices hit 3 year low; gasoline demand at an all time high; horizontal drilling at 16 month low, DUC wells down most in 15 months, et al

oil prices saw their largest weekly jump since 2016 this past week after Iran shot down a sophisticated US spy drone which the US claims was operating in international air space and oil traders braced for a US retaliation...after falling 2.7% to $52.51 a barrel last week despite an attack on oil product tankers near the Strait of Hormuz, the benchmark contract price of US crude for July delivery slid steadily throughout the day on Monday as reports of a major industrial slowdown in China outweighed supply fears stoked by the Gulf of Oman oil tanker attacks of last week and finished trading $1.07 lower at $60.94 a barrel...oil prices started lower again on Tuesday, on reports of OPEC struggles to set a date for their next meeting, but then spiked sharply on hopes of a U.S.-China trade deal, after Trump said that he would meet with Chinese President Xi Jingping next week in Japan and ended $1.97 higher at $53.90 a barrel...prices edged up in early trading on Wednesday, following reports that OPEC and its allies were close to agreeing on a meeting date, but slipped back below $54 a barrel after anxieties about global trade and a supply glut overshadowed the EIA report of record gasoline consumption and closed 14 cents lower at $53.76 a barrel...oil prices opened higher Thursday after OPEC and other producers finally agreed on a date for a meeting to discuss output cuts, and then soared more than 5% after Iran shot down a U.S. spy drone, raising fears of a shooting war in the Persian Gulf, with trading in the July oil contract expiring $2.89 higher at $56.65 a barrel and the price of oil for August delivery rising $3.10 to $57.07 a barrel...August oil then opened higher & continued rising to $57.98 a barrel on Friday, but then pulled back slightly after Trump called back U.S. bombers on concern the Iranian death toll would have been disproportionate to Iran’s downing of an unmanned American drone, with oil closing 36 cents higher at $57.43 a barrel...US oil prices thus ended the week nearly 10% higher, in the biggest weekly percentage gain since December 2016, on fears that further conflict would disrupt oil flows from the Middle East, although the price rise in the August contract itself was actually short of 9%..

natural gas prices, meanwhile, ended the week 20.1 cents, or more than 8% lower at $2.186 per mmBTU after falling each day until Friday. when they eked out a tenth of a cent gain...the natural gas contract for July delivery initially fell 11 cents over Tuesday and Wednesday, as the El Nino forecast suggested sustained heat in the lower 48 would be difficult to come by in the coming month and then fell 9.1 cents to a 3 year low after the EIA's natural gas storage report indicated a record injection for the season, well above market expectations...

the natural gas storage report from the EIA for the week ending June 14th showed that the quantity of natural gas held in storage in the US increased by 115 billion cubic feet to 2,203 billion cubic feet by the end of the week, which meant our gas supplies were 209 billion cubic feet, or 10.5% more than the 1,994 billion cubic feet that were in storage on June 15th of last year, while still 199 billion cubic feet, or 8.3% below the five-year average of 2,402 billion cubic feet of natural gas that have been in storage after the second week of June in recent years....this week's 115 billion cubic feet injection into US natural gas storage was well above an S&P Global Platts' survey of analysts which had expected a 104 billion cubic feet injection, and was much higher than the average 92 billion cubic feet of natural gas that have been added to gas storage during the second week of June in recent years...this week's injection was the largest ever for the 2nd week in June and the 5th largest injection of the past decade, in addition to being the 7th injection over 100 billion cubic feet this spring, in contrast to just 2 triple digit injections over the prior three years in any season...the 1,096 billion cubic feet of natural gas that have been added to storage over the past 12 weeks has been the largest injection of gas into storage on record for any similar period this early in the injection season, and probably about double the average 12 week build of the past decade, as the 824 billion cubic feet that were added during the same 12 weeks of 2014 is the only year that even appears close...

once again, a major factor in this week's seasonal record injection was the below normal temperatures for the week over the most populated areas of the US, which you can see on the map below, which thus reduced demand for air conditioning and power generation:

June 21 2019 temperature anomalies week ending June 13(source)

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending June 14th, showed modest decreases in our oil imports and in our crude production, which when combined with increases in our oil exports and our oil refining meant that we had to withdraw oil from out stored crude supplies for the 4th time in 13 weeks...our imports of crude oil fell by an average of 144,000 barrels per day to an average of 7,467,000 barrels per day, after falling by an average of 316,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 300,000 barrels per day to 3,422,000  barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,045,000 barrels of per day during the week ending June 14th, 444,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day lower at 12,200,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,245,000 barrels per day during this reporting week...

meanwhile, US oil refineries were reportedly using 17,264,000 barrels of crude per day during the week ending June 14th, 200,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 444,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 575,000 barrels per day short of what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+575,000) 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"....with that much oil unaccounted for, we have to figure that one or more of this week's crude oil metrics are again off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to an average of 7,467,000 barrels per day last week, now 7.6% less than the 8,080,000 barrel per day average that we were importing over the same four-week period last year...the 444,000 barrel per day decrease in our total crude inventories was all taken out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day lower at 12,200,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,700,000 barrels per day, while a 14,000 barrel per day decrease to 466,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national total....last year's US crude oil production for the week ending June 15th was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was roughly 11.9% above that of a year ago, and 44.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 93.9% of their capacity in using 17,264,000 barrels of crude per day during the week ending June 14th, up from 93.2% of capacity the prior week, and finally a fairly normal refinery utilization rate for this time of year....however, the 17,264,000 barrels per day of oil that were refined this week were still 2.5% below the 17,701,000 barrels of crude per day that were being processed during the week ending June 15th, 2018, when US refineries were operating at 96.7% of capacity....

with the increase in the amount of oil being refined, gasoline output from our refineries was similarly higher, increasing by 147,000 barrels per day to 10,423,000 barrels per day during the week ending June 14th, after our refineries' gasoline output had increased by 227,000 barrels per day the prior week....with those big increases in gasoline output, this week's gasoline production was 2.3% more than the 10,099,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 132,000 barrels per day to 5,371,000 barrels per day, after our distillates output had decreased by 165,000 barrels per day the prior week...but even with this week's increase, the week's distillates production was still 1.7% less than the 5,468,000 barrels of distillates per day that were being produced during the week ending June 15th, 2018.... 

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell for the 1st time in 5 weeks and for​ the ​13th time in 17 weeks, decreasing by 1,692,000 barrels to 233,221,000 barrels over the week to June 14th, after our gasoline supplies had increased by 764,000 barrels over the prior week...our gasoline supplies fell this week because the amount of gasoline supplied to US markets increased by 51,000 barrels per day to a record high 9,928,000 barrels per day and because our exports of gasoline rose by 99,000 barrels per day to 630,000 barrels per day, while our imports of gasoline rose by 137,000 barrels per day to 837,000 barrels per day...after our gasoline supplies had reached an all time record high nineteen weeks ago, they then fell by nearly 13% over 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, and hence are still 2.8% lower than last June 8th's inventory level of 240,040,000 barrels, and only 1% above the five year average of our gasoline supplies at this time of the year...

similarly, even with the increase in our distillates production, our supplies of distillate fuels fell for the 10th time in 14 weeks, decreasing by 1,000,000 barrels to 128,372,000 barrels during the week ending June 14th, after our distillates supplies had decreased by 1,000,000 barrels over the prior week....our distillates supplies fell this week even though the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 307,000 barrels per day to 4,061,000 barrels per day, because our exports of distillates rose by 416,000 barrels per day to 1,553,000 barrels per day while our imports of distillates rose by 42,000 barrels per day to 165,000 barrels per day....but even after this week's inventory decrease, our distillate supplies were still 8.9% higher than the 117,408,000 barrels of distillate that we had stored on June 15th, 2018, even as they fell to 5% below the five year average of distillates stocks for this time of the year...

finally, with greater oil exports and refinery usage, combined with lower oil imports and lower oil production, our commercial supplies of crude oil in storage fell for the seventh time in 22 weeks, decreasing by 3,106,000 barrels, from 485,470,000 barrels on June 7th to 482,364,000 barrels on June 14th...with that decrease, our crude oil inventories slipped to 7% above the recent five-year average of crude oil supplies for this time of year, but still remained more than 37% higher than the prior 5 year (2009 - 2013) average of crude oil stocks after the second week of June, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of June 14th were 13.1% above the 426,527,000 barrels of oil we had stored on June 15th, of 2018, but at the same time still 5.3% below the 509,095,000 barrels of oil that we had in storage on June 16th of 2017, and 3.5% below the 499,994,000 barrels of oil we had stored on June 17th of 2016...  

This Week's Rig Count

the US rig count fell for the 16th time in eighteen weeks over the week ending June 21st and was thus at another 16 month low, as the week saw the slowest drilling activity since February 2nd 2018....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 2 rigs to 967 rigs this past week, which was also down by 87 rigs from the 1059 rigs that were in use as of the June 22nd report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil rose by 1 rig to 788 rigs this week, which was​ still​ 73 fewer oil rigs than were running a year ago, and less than half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 4 rigs to 177 natural gas rigs, which was also down by 11 rigs from the 188 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...in addition, there was also the startup of a rig classified as miscellaneous this week, the first such miscellaneous running since October, but down from the 2 miscellaneous rigs that were running a year ago, when Cabot Oil & Gas was drilling 2 exploratory wells into the Knox formation in Ohio that Baker Hughes ha​d ​labeled as miscellaneous...

the rig count in the Gulf of Mexico was unchanged at 24 rigs this week, with 22 rigs running offshore from Louisiana and 2 rigs deployed offshore from Texas....that's a 6 rig increase from the 18 rigs that were deployed in the Gulf in the same week a year ago, when 17 rigs were drilling in Louisiana waters and one was deployed offshore from Texas..

the count of active horizontal drilling rigs was down by 6 to 846 horizontal rigs this week, which was a new 16 month low for horizontal drilling and 84 fewer horizontal rigs than the 930 horizontal rigs that were in use in the US on June 22nd of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was unchanged at 68 directional rigs this week, but those were up by 6 rigs from the 62 directional rigs that were operating during the same week of last year....on the other hand, the vertical rig count was up by 4 rigs to 53 vertical rigs this week, but those were down from the 60 vertical rigs that that were in use on June 22nd of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of June 21st, the second column shows the change in the number of working rigs between last week's count (June 14th) and this week's (June 21st) count, the third column shows last week's June 14th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 22nd of June, 2018...    

June 21 2019 rig count summary

in the Texas Permian, 3 rigs were shut down in Texas Oil District 8, which would be the core Permian Delaware, while a single rig was concurrently started up in Texas Oil District 7C, or the southern Permian Midland basin; since those changes account for the 2 rig loss shown for the Permian above, we have to figure that the rig that was shut down in New Mexico had been drilling in one of the other basins in the state, with the San Juan basin in the northwest most likely, since ​a ​decrease in natural gas rigs is not ​easily ​accounted for otherwise...while Texas had a rig start up and another shut down in areas of the state not in a major tracked basin shown above, the other two rigs pulled out of Texas that are shown came out of the Granite Wash in the panhandle, with one of those having been drilling for gas...other natural gas rig shut downs that are shown include the two that were shut down in Pennsylvania's Marcellus, and natural gas rigs that had been operating in Oklahoma's Arkoma Woodford​ and Ohio's Utica shale, while there was also a natural gas rig removed from an "other basin" not tracked separately by Baker Hughes, which​,​ as we've speculated​,​ could have been from New Mexico's San Juan...at the same time, 2 rigs targeting natural gas were started up in West Virginia's Marcellus, one of just 6 states where there continues to be more drilling than a year ago...

note that other than the major producing states shown above, Alabama also saw a rig shut down this week, and now have just two rigs deployed, same as their count of a year ago, while one rig was newly deployed in Mississippi, where there are now 5 rigs operating, up from four a year ago...also note that while one rig was shut down in Ohio's Utica shale, Ohio's rig count remained unchanged at 20 rigs because a vertical rig began drilling in Sandusky county to a depth of "less than 5000 feet"...that's the rig that Baker Hughes classified as 'miscellaneous', which are usually exploratory wells not specifically targeting a known oil or gas field...to my knowledge, that's the first drilling in Sandusky county, or anywhere in that part of the state, since the shale era shifted the focus to deeper beds accessed by horizontal drilling in the southeast...

DUC well report for May

Monday of this week saw the release of the EIA's Drilling Productivity Report for June, which includes the EIA's May data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the third month in a row, this report showed a decrease in uncompleted wells nationally in May, as both drilling of new wells decreased and completions of drilled wells decreased....while there continued to be a increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of western Texas and New Mexico, all other regions saw decreases in their DUC inventory, thus more than offsetting the Permian increases...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 77 wells, from a revised 8,360 DUC wells in April to 8,283 DUC wells in May, which still represents a 21.2% increase from the 6,832 wells that had been drilled but remained uncompleted as of the end of May a year ago...th​e decrease occurred as 1,318 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during May, down by 46 from the 1,364 wells drilled in April and the lowest in 13 months, while 1,395 wells were completed and brought into production by fracking, a decrease of 16 well completions from the 1,411 completions seen in April, but the same number of well completions as in March...at the May completion rate, the 8,283 drilled but uncompleted wells left at the end of the month represent a 5.9 month backlog of wells that have been drilled but not yet fracked...  

​unlike what we've seen over recent years​,​ oil producing regions​ saw ​​the majority of the ​May DUC well decreases, with all major oil producing regions except for the Permian showing double digit DUC drops...the number of DUC wells left in the Oklahoma Anadarko decreased by 33, from 996 in April to 963 DUC wells in May, as 127 wells were drilled into the Anadarko basin during May while 160 Anadarko wells were being fracked....at the same time, DUC wells in the Eagle Ford of south Texas decreased by 24, from 1,479 DUC wells in April to 1,455 DUCs in May, as 181 wells were drilled in the Eagle Ford during May, while 205 already drilled Eagle Ford wells were completed...in addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 18 to 538, as 177 Niobrara wells were drilled in May while 195 Niobrara wells were being fracked...meanwhile, DUC wells in the Bakken of North Dakota fell by 17, from 716 DUC wells in April to 699 DUCs in May, as 113 wells were drilled into the Bakken in May, while 130 of the drilled wells in that basin were completed...

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 24 wells, from 461 DUCs in April to 437 DUCs in May, as 124 wells were drilled into the Marcellus and Utica shales during the month, while 148 of the already drilled wells in the region were fracked...in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory decrease by 2 wells to 220, as 51 wells were drilled into the Haynesville during April, while 53 Haynesville wells were fracked during the same period....

on the other hand, the Permian basin of west Texas and New Mexico saw its total count of uncompleted wells rise by 41, from 3,930 DUC wells in April to 3,971 DUCs in May, as 545 new wells were drilled into the Permian, but only 504 wells in the region were fracked......thus, for the month of May, DUCs in the five oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 51 wells to 7,626 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 26 wells to 657 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and natural gas...

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note: there's more here...