US oil production at a 25 month high, gasoline production at a record high, oil supplies at a 19 month low

oil prices fell on Monday and never recovered to the levels of last week, as potential impacts from the hurricane hitting the Texas coast weighed on crude prices, while simultaneously boosting those of gasoline...after closing last Friday with a 3% gain to $48.51 a barrel in a week that saw prices a bit lower, US light sweet crude for September delivery fell $1.14 to $47.37 a barrel on Monday, in a selloff that was widely described as "profit-taking'...oil prices then headed higher Tuesday, with the expiring September oil contract closing 27 cents higher at $47.64 a barrel, while the October contract, which had started the week at $48.89, rose 30 cents to $47.83 a barrel, on expectations that the week's data would show that U.S. supplies of crude oil had fallen for an eighth-consecutive week...with Wednesday's oil price quotes now referencing crude for October delivery, oil prices rose 58 cents, or 1.2%, to settle at $48.41 a barrel at the close on Wednesday after the EIA report showed the expected decreases in supplies of crude oil and gasoline...with Hurricane Harvey strengthening and heading towards the Texas coast where one third of US refining capacity was in the path of the storm, oil prices tumbled 98 cents, or 2%, to $47.43 a barrel on Thursday, on fears that the Harvey would force refinery closures and thus reduce demand; hence, at the same time, September gasoline rose 4.52 cents, or almost 3%, to $1.6641 a gallon...oil prices then recovered and edged up 44 cents to $47.87 a barrel on Friday, as the the oil industry shut down production and evacuated offshore wells as the storm approached...that left the October oil contract price down 89 cents, or 1.8% for the week, its third consecutive weekly drop, while at the same time US gasoline spot prices had risen almost 10 percent to a high of $1.74 a gallon, their highest since April....the result was that U.S. gasoline crack spreads, or the difference between the price refineries pay for oil and their price of gasoline, rose throughout the week and ended at their widest in five years for this time of year...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending August 18th, showed a big increase in our imports of crude oil, still near-record amounts of crude oil being used by US refineries, and yet another withdrawal of oil from our commercial stocks....our imports of crude oil rose by an average of 664,000 barrels per day to an average of 8,790,000 barrels per day during the week, while at the same time our exports of crude oil rose by 59,000 barrels per day to an average of 936,000 barrels per day, which meant that our effective imports netted out to an average of 7,854,000 barrels per day during the week, 605,000 barrels per day more than during the prior week...at the same time, our field production of crude oil rose by 26,000 barrels per day to an average of 9,528,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 17,382,000 barrels per day during the cited week...

during the same week, refineries used 17,461,000 barrels of crude per day, 104,000 barrels per day less than they used during the prior week, while at the same time 475,000 barrels of oil per day were being pulled out of oil storage facilities in the US...hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was 396,000 more barrels per day than what refineries reported they used during the week...to account for that discrepancy, the EIA needed to insert a (-396,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum  Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as "unaccounted for crude oil"...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 8,233,000 barrels per day, which was still 3.1% below the imports of the same four-week period last year....this week's 26,000 barrel per day increase in our crude oil production resulted from a 14,000 barrel per day increase in oil output from Alaska and a 12,000 barrels per day increase in oil output from wells in the lower 48 states...the 9,528,000 barrels of crude per day that were produced by US wells during the week ending August 18th was the most oil US wells have produced since July 17, 2015, 8.6% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.5% more than the 8,548,000 barrels per day of oil we produced during the during the week ending August 19th a year ago, while oil output was still 0.9% below the record US oil production of 9,610,000 barrels per day set during the week ending June 5th 2015...

US oil refineries were operating at 95.4% of their capacity in using those 17,461,000 barrels of crude per day, which was down from 96.1% of capacity the prior week, but still above normal for this or for any time of year...the amount of oil refined this week was 4.7% more than the 16,679,000 barrels of crude per day.that were being processed during week ending August 19th, 2016, when refineries were operating at 92.5% of capacity, and roughly 11.2% above the 10 year average of 15.7 million barrels of crude refined per day at this time of year...

even with oil refining down a bit this week, gasoline production from our refineries increased by 518,000 barrels per day to a new record high of 10,566,000 barrels per day during the week ending August 18th, topping the previous record set during the week ending last December 23rd, 2016....that put this week's gasoline output at a level 5.3% higher than the 10,035,000 barrels of gasoline that were being produced daily during the comparable week a year ago....however, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 196,000 barrels per day to 5,091,000 barrels per day at the same time, which was still 5.0% more than the 4,849,000 barrels per day of distillates that were being produced during the week ending August 19th last year....

however, even with this week's record gasoline production, our end of the week gasoline inventories decreased by 1,223,000 barrels to 229,902,000 barrels by August 18th, the 8th decrease in gasoline inventories in 10 weeks...that was as our domestic consumption of gasoline rose by 107,000 barrels per day to 9,629,000 barrels per day, and as our imports of gasoline fell by 122,000 barrels per day to 555,000 barrels per day, and as our exports of gasoline rose by 23,000 barrels per day to 693,000 barrels per day...with significant gasoline supply withdrawals in 8 out of the last 10 weeks, our gasoline inventories are now 1.2% below last August 19th's level of 232,695,000 barrels, even as they are still 7.2% higher than the 214,434,000 barrels of gasoline we had stored on August 21st of 2015, and almost 9% above the 10 year average for gasoline supplies for this time of the year...

meanwhile, with the decrease in our distillates production, our supplies of distillate fuels were little changed, rising by just 28,000 barrels to 148,387,000 barrels over the week ending August 18th, after rising by 702,000 barrels the previous week…that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 145,000 barrels per day to 4,077,000 barrels per day, while our imports of distillates fell by 35,000 barrels per day to 132,000 barrels per day and as our exports of distillates rose by 10,000 barrels per day to 1,142,000 barrels per day....after this week’s small increase, our distillate inventories were still 3.2% lower than the 153,257,000 barrels that we had stored on August 19th, 2016, and fractionally lower than the distillate inventories of 149,836,000 barrels of distillates that we had stored on August 21st of 2015, even as they remain roughly 5.7% above the 10 year average for distillates stocks for this time of the year…

finally, even with the large increase in oil imports, our commercial crude oil inventories fell for the 18th time in the past 20 weeks, decreasing by another 3,327,000 barrels to 463,165,000 barrels as of August 18th, leaving us with the least oil we've had in storage since January 15th, 2016...since that's been a matter of concern in some corners, we'll include a graph of what that looks like below...

the above graph was taken from the Zero Hedge coverage of this week's EIA release and it shows our commercial inventories of crude in billions of barrels from September 2012 through this week's report....while we can clearly see that our oil supplies are down substantially over the last 4 months from their March peak, to a level roughly matching that of mid-January 2016, they're still up considerably from the normal level for our oil supplies in the years before the oil glut started building up.. thus, though our oil inventories as of August 18th were 6.0% below the 492,962,000 barrels of oil we had stored on August 19th of 2016, they were still 10.5% more than the 418,990,000 barrels in of oil that were in storage on August 21st of 2015, and 40.8% higher than the 329,024,000 barrels of oil we had in storage on August 22nd of 2014...

This Week's Rig Count

US drilling activity decreased for the 6th time in the past 9 weeks during the week ending August 25th, following a string of 23 consecutive weekly increases earlier this year, as both drilling for oil and for natural gas slowed....Baker Hughes reported that the total count of active rotary rigs running in the US fell by 6 rigs to 940 rigs in the week ending Friday, which was still 451 more rigs than the 489 rigs that were deployed as of the August 26th report in 2016, while it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil decreased by four rigs to 759 rigs this week, which still left oil rigs up by 353 oil rigs over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations decreased by 2 rigs to 180 rigs this week, which was still 99 more rigs than the 81 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...in addition, one rig that was classified as miscellaneous was still drilling this week, compared to the 2 miscellaneous rigs that were working a year ago..

the Gulf of Mexico rig count rose by one rig to 17 Gulf rigs this week, the same number that were working in the Gulf during the same week last year...that's also the same as the total US offshore rig count for this week, since there was no other US offshore drilling except in the Gulf...

active horizontal drilling rigs fell by 3 rigs to 796 rigs this week, which left the horizontal rig count still up by 417 rigs from the 379 horizontal rigs that were in use in the US on August 26th of last year, while their count was also still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the vertical rig count was down by 2 rigs to 64 vertical rigs this week, which was still up from the 62 vertical rigs that were deployed during the same week last year...at the same time, the directional rig count was down by 1 rig to 80 rigs this week, which was still up from the 48 directional rigs that were deployed on August 26th of last year....

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 producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of August 25th, the second column shows the change in the number of working rigs between last week's count (August 18th) and this week's (August 25th) count, the third column shows last week's August 18th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday 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 for the 26th of August, 2016...    

noteworthy this week is that the Marcellus saw the greatest loss of any basin, down 3 rigs to 43 rigs...hence, Pennsylvania joined Texas as the states with the greatest decrease, as drillers in both states shut down three rigs...we would also note that the number of rigs active in Pennsylvania fallen to 31, while at the same time the Ohio rig count was up by 1 rig to 29 rigs with the addition of another rig in the Utica...the drop of 2 rigs in natural gas activity was a bit more involved than Pennsylvania shutting down 3 rigs while Ohio added one, however, since natural gas rigs were also added in the Haynesville of Louisiana and the Eagle Ford of south Texas, where there were two oil-directed rigs pulled out at the same time...that was as two natural gas rigs were concurrently pulled out of 'other' basins, which are not named by Baker Hughes in their summaries....going forward, we can probably expect to see a reduction in Eagle Ford drilling next week, because widespread rain totals of up to 40 inches are expected in the area, and some analysts believe those shale fields could be out of commission for up to two months in the subsequent flooding...meanwhile, that new rig in the Gulf of Mexico was supposedly offshore from Texas, and we can almost guarantee that there was no drilling going on there as the Category 4 Hurricane passed overhead...

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note:  there’s more here…

US crude production highest in two years; oil drilling slows most since January, DUC wells at a record high

oil prices fell by more than 4% by midweek of the past week, but then recovered most of their earlier losses on Friday to end the week little changed...after sliding 1.4% to $48.82 a barrel last week on increased OPEC production, contract prices for WTI oil for September delivery fell 2.5% on Monday, the largest drop in 5 weeks, after Chinese refineries reported their lowest demand for oil in 3 years against the backdrop of rising crude output from OPEC and U.S. shale-oil producers, with oil prices settling at $47.59 a barrel, a loss of $1.23 on the day...oil prices then hit a three week low of $47.02 a barrel on Tuesday on ongoing demand concerns and strength in the US dollar, before recovering to settle little changed for the day at $47.55 a barrel...oil prices then tanked again on Wednesday, falling 1.6% to $46.78 a barrel by the close, largely on the EIA's report that US crude production rose to the highest level in over two years, while traders ignoried that the same report showed the largest weekly decline in U.S. crude supplies since last September...prices ended their three session slide on Thursday, rising 31 cents to close at $47.09 a barrel, on expectations of a hefty draw of crude from the U.S. oil storage hub at Cushing, Oklahoma, where US light sweet crude prices are benchmarked from...while little changed on Friday morning, oil prices took off on Friday afternoon after Baker Hughes reported that US oil rig count dropped by 5 rigs, the largest drop in 7 months, with near panic buying of crude futures pushing oil for September delivery up $1.42, or more than 3%, to $48.51 per barrel, which noneheless still left it down 31 cents on the week, for the 3rd consecutive weekly decline...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending August 11th, showed a modest increase in our imports of crude oil, ongoing near-record amounts of crude oil being used by US refineries, and a large withdrawal of oil from our commercial stocks, with all the data called into question by a large swing in unaccounted for crude oil...our imports of crude oil rose by an average of 364,000 barrels per day to an average of 8,126,000 barrels per day during the week, while at the same time our exports of crude oil rose by 170,000 barrels per day to an average of 877,000 barrels per day, which meant that our effective imports netted out to 7,249,000 barrels per day during the week, 194,000 barrels per day more than during the prior week...at the same time, our field production of crude oil rose by 79,000 barrels per day to an average of 9,502,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 16,751,000 barrels per day during the cited week... 

during the same week, refineries used 17,565,000 barrels of crude per day, just 9,000 barrels per day less than they used during the prior record week, while at the same time 1,278,000 barrels of oil per day were being pulled out of oil storage facilities in the US...hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was 464,000 more barrels per day than what refineries reported they used during the week...to account for that discrepancy, the EIA needed to insert a (-464,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as "unaccounted for crude oil"...that's a swing of 638,000 barrels per day from the "unaccounted" +173,000 figure of last week, and hence that discrepancy underlies all of this week's crude oil changes...

details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 8,046,000 barrels per day, which was still 4.7% below the imports of the same four-week period last year...the 1,278,000 barrel per day decrease in our total crude inventories was all withdrawn from our commercial stocks of crude oil, since the amount of oil stored in our Strategic Petroleum Reserve remained unchanged....this week's 79,000 barrel per day increase in our crude oil production resulted from a 54,000 barrel per day increase in oil output from Alaska and a 25,000 barrels per day increase in oil output from wells in the lower 48 states...the 9,502,000 barrels of crude per day that were produced by US wells during the week ending August 11th was the most we've produced since July 2015, 8.3% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 10.5% more than the 8,597,000 barrel per day of oil we produced during the during the week ending August 12th a year ago, while oil output was still 1.1% below the June 5th 2015 record US oil production of 9,610,000 barrels per day... 

US oil refineries were operating at 96.1% of their capacity in using those 17,565,000 barrels of crude per day, which was down from 96.3% of capacity the prior week, which had been the highest refinery utilization rate in 12 years...the amount of oil refined this week was 4.7% more than the 16,865,000 barrels of crude per day.that were being processed during week ending August 12th, 2016, when refineries were operating at 93.5% of capacity, and roughly 11.9% above the 10 year average of 15.7 million barrels of crude refined per day at this time of year...

even with oil refining little changed this week, gasoline production from our refineries decreased by 253,000 barrels per day to 10,048,000 barrels per day during the week ending August 11th, which left this week's gasoline output 2.3% lower than the 10,280,000 barrels of gasoline that were being produced daily during the comparable week a year ago....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 18,000 barrels per day to 5,287,000 barrels per day, which was still 7.0% more than the 4,939,000 barrels per day of distillates that were being produced during the week ending August 12th last year....

in spite of the decrease in our gasoline production, our end of the week supply of gasoline increased by 22,000 barrels to 231,125,000 barrels by August 11th, the 2nd increase in gasoline inventories in 9 weeks...that was as our domestic consumption of gasoline fell by 275,000 barrels per day to 9,522,000 barrels per day, while other factors worked to reduce supplies; ie, our imports of gasoline fell by 441,000 barrels per day to 667,000 barrels per day, and our exports of gasoline rose by 216,000 barrels per day to 670,000 barrels per day...however, with significant gasoline supply withdrawals in 7 out of the last 9 weeks, our gasoline inventories are still 0.7% below last August 12th's level of 232,659,000 barrels, even as they are still 8.6% higher than the 212,774,000 barrels of gasoline we had stored on August 14th of 2015, and almost 9% above the 10 year average for gasoline supplies for this time of the year...

similarly, even with the decrease in our distillates production, our supplies of distillate fuels rose by 702,000 barrels to 148,387,000 barrels over the week ending August 11th…that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 288,000 barrels per day to 4,222,000 barrels per day, and as our imports of distillates rose by 126,000 barrels per day to 167,000 barrels per day, even as our exports of distillates rose by 49,000 barrels per day to 1,132,000 barrels per day....even after this week’s increase, our distillate inventories were still 3.1% lower than the 153,135 ,000 barrels that we had stored on August 12th, 2016, and fractionally lower than the distillate inventories of 148,400,000 barrels of distillates that we had stored on August 14th of 2015, even as they remain roughly 5.7% above the 10 year average for distillates stocks for this time of the year…

finally, in light of this week's big swing in "unaccounted for crude oil", our commercial crude oil inventories fell for the 17th time in the past 19 weeks, apparently decreasing by another 8,945,000 barrels to 466,492,000 barrels as of August 11th, leaving us with the least oil we've had in storage since january 22nd 2016...thus, our oil inventories as of August 11th were also 4.9% below the 490,461,000 barrels of oil we had stored on August 12th of 2016, even as they were still 9.9% more than the 424,442,000 barrels in of oil that were in storage on August 14th of 2015...compared to historical quantities of oil we've had in storage at the same time of year, before our oil glut began to build up, this week's oil supplies were still  39.0% higher than the 335,568,000 barrels of oil we had in storage on August 15th of 2014, and about 40.3% above the 10 year average of our oil supplies for the second week of August ... 

This Week's Rig Count

US drilling activity decreased for the 5th time in 8 weeks during the week ending August 18th, following a string of 23 consecutive weekly increases earlier this year, as drilling for oil slowed while rigs drilling for natural gas inched higher....Baker Hughes reported that the total count of active rotary rigs running in the US fell by 3 rigs to 946 rigs in the week ending Friday, which was still 455 more rigs than the 491 rigs that were deployed as of the August 19th report in 2016, even though it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil decreased by five rigs to 763 rigs this week, the largest drop in oil rigs since January 13th, which still left oil rigs up by 357 oil rigs over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations increased by 1 rig to 182 rigs this week, which was also 99 more rigs than the 83 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...in addition, one rig that was classified as miscellaneous started drilling this week, compared to the 2 miscellaneous rigs that were working a year ago..

the Gulf of Mexico rig count fell by one rig to 16 offshore rigs this week, which was down the 18 rigs that were working in the Gulf during the same week last year...in addition, the rig that had been drilling offshore from Alaska was also shut down, and thus the total US offshore rig count was down 2 to 16 rigs...

active horizontal drilling rigs fell by 2 rigs to 799 rigs this week, which left the horizontal rig count still up by 417 rigs from the 382 horizontal rigs that were in use in the US on August 19th of last year, while their count was also still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the vertical rig count was down by 6 rigs to 66 vertical rigs this week, which was still up from the 64 vertical rigs that were deployed during the same week last year...meanwhile, the directional rig count was up by 5 rigs to 81 rigs this week, which was also up from the 45 directional rigs that were deployed on August 15th of last year.... 

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 producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of August 18th, the second column shows the change in the number of working rigs between last week's count (August 11th) and this week's (August 18th) count, the third column shows last week's August 11th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday 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 for the 19th of August, 2016...    

it's odd to see a decrease in the Oklahoma rig count even as the Cana Woodford count is up by 4 and while the Ardmore Woodford also added a rig....that strongly suggests that the rig that was shut down in the Granite Wash was on the Oklahoma side of the Texas panhandle border, and that the two rigs that were idled in the Mississippian were similarly on the Oklahoma side of the Kansas border where that field lies...otherwise, changes in most other states match the basins; 2 rigs came out the Williston in North Dakota, and shutdown of 2 offshore platforms accounts for the rig count decreases in Alaska and Louisiana...meanwhile, the rig that was added in the Ardmore Woodford accounted for the natural gas addition; note that drilling in the 3 major natural gas basins, the Utica, the Marcellus, and the Haynesville, was unchanged from a week earlier...and there were also no changes in the number of rigs drilling in states other than those shown above..

DUC well report for July

Monday of this week saw the release of the EIA's Drilling Productivity Report for August, which includes the EIA's July data for drilled but uncompleted oil and gas wells in the 7 most productive US shale basins...commencing with Monday's report, the EIA has begun coverage of drilling productivity and drilled but uncompleted wells (DUCs) in the Anadarko region, which includes 24 Oklahoma and 5 Texas counties, and, which, based on their mapping, would apparently include the STACK and SCOOP reservoirs in the Woodford shale, and the Granite Wash tight sands band transversing the Oklahoma - Texas Panhandle border....by adding this region, this report now covers 87% of all U.S. onshore drilling operations....at the same time, they have consolidated their reporting on the Utica shale and the Marcellus into a single geographic unit labeled the Appalachia region...their reason for doing this appears to be a rather simplistic state border consideration; as they explain: "With the increasing number of wells in Pennsylvania being drilled into the Utica formation and some wells in Ohio producing from the Marcellus shale, the previous regional definitions based on surface boundaries are becoming less meaningful, especially where the two plays overlap."...as a result of this consolidation, the Appalachia region will refer to a wide geographical region that includes almost all of West Virginia, most of Pennsylvania, southeastern Ohio, and western New York..

after those changes, this report once again showed a large increase in uncompleted wells nationally, mostly because of dozens of newly drilled but uncompleted wells (DUCs) in the Permian basin of west Texas, but also because of proportional growth in uncompleted wells in the Eagle Ford of south Texas and the newly covered Anadarko region...for all 7 sedimentary basins covered by this report, the total count of DUC wells increased by 208, from 6,851 wells in June to 7059 wells in July, the ninth consecutive monthly increase in uncompleted wells, and, with the addition of the Anadarko, the highest number of such unfracked wells in the short history of this report....as we've seen from the weekly rig counts, US horizontal drilling expanded rapidly in the year thru June, more than doubling over that period, and as a result a shortage of competent fracking crews has developed, such that existing fracking crews have been unable to keep up with the number of newly drilled wells...moreover, the last month of trading for the July oil contract, which would govern prices received for oil produced during that month, saw prices average $46 a barrel, below the average breakeven price for most US basins, which probably discouraged any new production that hadn't been contracted for at a better price earlier...

with the addition of the Anadarko, a total of 1,224 new wells were drilled in the 7 basins now covered by this report during July, but only 1,016 drilled wells were completed in the same areas, thus accounting for the 208 DUC well increase for the month....as has been the case all year, the July DUC increases were predominantly oil wells, with most of those in the Permian basin...the Permian saw its total count of uncompleted wells rise by 135, from 2,195 DUC wells in June to 2,330 DUCs in July, as 485 new wells were drilled into the Permian but only 350 wells in the region were fracked...at the same time, DUC wells in the Anadarko region rose by 42, from 906 DUC wells in June to 948 DUCs in July, as 162 wells were drilled in the Anadarko region in July but only 120 drilled wells were completed....similarly, DUCs in the Eagle Ford of south Texas rose by 42, from 1,385 DUC wells in June to 1,420 DUCs in July, as 180 wells were drilled in the Eagle Ford during July, while just 145 Eagle Ford wells were completed....in addition, DUC wells in the Niobrara chalk of the Rockies front range increased by 6 to 674, as 148 Niobrara wells were drilled but just 142 Niobrara wells were fracked, while the Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 5 wells to 194, as 49 wells were drilled into the Haynesville, while 44 Haynesville wells were fracked during the same period.....on the other hand, the drilled but uncompleted well count in the Appalachian region fell by 13 wells, from 624 DUCs in June to 611 DUCs in July, as 71 wells were drilled into the Marcellus while 73 Marcellus were fracked, and as 29 new wells were drilled into the Utica during the month while 40 Utica wells were completed....the Utica now has just 43 DUC wells remaining, down from 126 DUC wells in January, so if the Utica frackers intend to keep Ohio gas production at their recent levels, more Utica wells would have to be drilled shortly....in the remaining region covered by this report, DUC wells in the Bakken of North Dakota decreased by 2 to 782, as 100 wells were drilled into the Bakken while 102 Bakken wells were fracked...thus, for the month of July, DUCs in the 5 oil basins tracked by in this report (ie., Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by 213 wells to 6,154 wells, while the DUC count in the natural gas regions (the Marcellus, Utica, and the Haynesville) decreased by 8 wells to 905 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...

 

note: there's more here...

OPEC oil production jumps to 7 month high; US oil refining at a new record...

oil prices trended lower this week, mostly on a report that OPEC producers had increased their crude oil output for the 4th month in a row, reaching their highest level since their production cut pact was initiated...after closing last week little changed at $49.58 a barrel, oil prices headed lower on Monday after a report of higher oil output from Libya's largest oil field, with the contract for September US oil closing down 19 cents at $49.58 a barrel...oil prices continued falling Tuesday, ending down another 22 cents at $49.17 a barrel, on a report that several OPEC producers had increased exports, despite the loudly orchestrated export cuts by the Saudis...contract prices then recovered on Wednesday, after the weekly EIA report showed another huge draw from US oil supplies, with oil closing up 39 cents at $49.56 a barrel...oil prices continued heading higher on Thursday morning, reaching as high as $50.22 a barrel on heavy trading volume, before reversing and falling to as low as $48.35 a barrel, after the August OPEC monthly market report revealed that OPEC output rose by 172.6 thousand barrels per day to 32.87 million barrels per day, their highest monthly production this year, with oil prices finally stabilizing at $48.59 a barrel at the close for a loss of 97 cents on the day, in the heaviest trading in September oil in the history of the contract...after continuing to fall to a 2½ week low of $48.01 a barrel on Friday morning, oil prices then moved higher on reports of instability in Nigeria and higher global demand for oil, closing the week at $48.82 a barrel, still logging the 2nd consecutive weekly decline...

OPEC's July oil report

with OPEC's increased production a major factor in this week's lower oil price, we'll start by quickly reviewing OPEC's August Oil Market Report (covering July OPEC & global data), which as we noted was released on Thursday of this week....the first table from the August report that we'll include here is from page 62 of that OPEC pdf, 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 an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures... 

from this table of official oil production data, we can see that OPEC oil output increased by 172,600 barrels per day in July, to 32,869,000 barrels per day, from a June oil production total of 32,696,000 barrels per day, a figure that was originally reported as  32,611,000 barrels per day (for your reference, here is the table of the official June OPEC output figures before this month's revisions)...as we can see in the far right column, the entirety of the July OPEC increase of 172,600 barrels per day came as a result of a 154,300 barrel per day increase from Libya, and a 34,300 barrel per day increase from Nigeria, the two OPEC countries that are exempt from the production cuts because their production had previously been driven lower by domestic strife...in addition, the relatively large decrease of 33,100 barrels per day by Iraq, who still remains well over their production quota, was almost entirely offset by a 31,800 barrels per day increase in oil output from Saudi Arabia, who produced 10,067,000 barrels of oil per day in July, which is now slightly over their quota too, as can be seen in the table below:

the above table is from the "OPEC guide" page at S&P Global Platts: the first column of numbers shows average daily production in millions of barrels of oil per day for each of the OPEC members over the first seven months of this year (the targeted period) and the 2nd column shows the allocated daily production in millions of barrels of oil per day for each member, as they agreed to at their November meeting, and the 3rd column shows how much each has averaged over or under their quotas for the seven months of this year that OPEC has curtailed production...the problem with this is that the current publication of this table had erroneously placed data on the lines for Iran and Iraq, and although i have notified Platts of their error, a corrected table is not yet forthcoming...so what i did was insert the Iran and Iraq data from the previous iteration of this table onto the Iran and Iraq lines, so we at least have an accurate representation of the daily quotas for each of the OPEC members...

the next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from August 2015 to July 2017, and it comes from page 63 of the August OPEC Monthly Oil Market Report....the light 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...the last bar, mistakenly marked Jun 17, actually shows July 17 data...

the preliminary data graphed above indicates that total global oil production rose to 97.30 million barrels per day in July, up by 0.17 million barrels per day from a June total of 97.13 million barrels per day, which was revised .54 million barrels per day higher than the 96.59 million barrels per day global oil output for June that was reported a month ago...the July figure was also 1.99 million barrels per day higher than the 95.14 million barrels of oil per day that was being produced globally in July a year ago (see last August's OPEC report for year ago data)...OPEC's July production of 32,869,000 barrels per day thus represented 33.8% of what was produced globally,  a small decrease from the revised 33.9% OPEC share in June...OPEC's July 2016 production, excluding Indonesia, was at 32,369,000 barrels per day, so even after the alleged production cuts, the 13 OPEC members who were part of OPEC last year, excluding new member Equatorial Guinea, are still producing nearly 1.1% more oil than they were producing a year ago, when they were supposedly producing flat out...

furthermore, even with the seven months of production cuts we can see on the above graph, there is still a small surplus of oil supply being produced globally, as the next table that we'll include will show us..    

the table above comes from page 37 of the August OPEC Monthly Oil Market Report, and it shows regional and total oil demand in millions of barrels per day for 2016 in the first column, and OPEC's forecast for oil demand by region and globally over 2017 over the rest of the table...on the "Total world" line of the fourth column, we've circled in blue the figure we're interested in, which is their estimate for global oil demand for the third quarter of 2017...

OPEC's estimate is that during the 3rd quarter of this year, all oil consuming areas of the globe will use 97.28 million barrels of oil per day, up from the 95.65 millions of barrels of oil per day the world was using in the 2nd quarter, and up from the 95.12 millions of barrels of oil per day they were using in 2016...that's typical for summer, since the most heavily populated regions of the globe are in the Northern Hemisphere, and demand for gasoline and power for air conditioning rises in the summer...however, as OPEC showed us in the oil supply section of this report and the summary supply graph above, even with the OPEC and non-OPEC production cuts, the world's oil producers were still producing 97.30 million barrels per day during July, which means that even during the period of greatest demand, there continued to be a surplus of around 20,000 barrels per day of global oil production in July, even after 7 months of OPEC and NOPEC production cuts...also note that global production for June was concurrently revised higher, to 97.13 million barrels per day, so that means the global oil surplus during June was therefore around 1,480,000 barrels per day,  based on the revised second quarter global demand figure of 95.65 million barrels per day shown above...at the same time, May's global oil surplus was reduced by the upward revision of 2nd quarter demand to 270,000 barrels per day....that revision also means that April's global oil supply was roughly 40,000 barrels per day less than the revised demand, so there is now one month out of the seven when OPEC cuts were effective at reducing supply....prior to that, however, we saw that the global oil surplus during March was around 780,000 barrels per day, and nearly a million barrels per day in January and February, as we've shown when reviewing revisions to these reports in prior months...taken together, this data means that despite the seven months of OPEC production cuts, more than 135 million barrels of oil have been added to the global oil glut since the 1st of the year..  

last, we'll include a graph of the total OPEC oil output for the 13 long term OPEC members included in this report, so we can see how this month's production stacks up compared to historical figures...

the above graph, taken from the 'OPEC July Production Data" post at the Peak Oil Barrel blog, shows total oil production, in thousands of barrels per day, for the 13 members of OPEC, for the period from January 2005 to July 2017, using the same official data from secondary sources as we saw in the first table above...here we can obviously see that OPEC's July production of 32,869,000 barrels per day is up quite a bit from their previous production this year and is even approaching the record of 33,374,000 million barrels per day the cartel produced in November, a level achieved as they all over produced so that their cuts would be off a higher base...so even as they've cut their oil production from that level, their output for the seven months of this year was actually higher than in the same seven months a year ago, leaving OPEC well on track to exceed their 2016 production this year, even as they continue to orchestrate the oil markets with reports of their "reduced" production...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending August 4th, indicated a big drop in our imports of crude oil, accompanied by a record amount of oil used by US refineries, and hence a large withdrawal from our commercial stocks of crude oil to meet the needs of that refining...our imports of crude oil fell by an average of 491,000 barrels per day to an average of 7,762,000 barrels per day during the week, while at the same time our exports of crude oil rose by 5,000 barrels per day to an average of 707,000 barrels per day, which meant that our effective imports netted out to 7,055,000 barrels per day during the week, 496,000 barrels per day less than during the prior week...at the same time, our field production of crude oil fell by 7,000 barrels per day to an average of 9,423,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 16,478,000 barrels per day during the cited week...

during the same week, refineries used a record 17,574,000 barrels of crude per day, 166,000 barrels per day more than they used during the prior week, and hence at the same time 922,000 barrels of oil per day had to be pulled out of oil storage facilities in the US...however, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was still 174,000 fewer barrels per day than what refineries reported they used during the week...to account for that discrepancy, the EIA needed to insert a (+174,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as "unaccounted for crude oil"...

details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports still rose to an average of 8,014,000 barrels per day, which was 4.9% below the imports of the same four-week period last year...the 922,000 barrel per day decrease in our total crude inventories was all withdrawn from our commercial stocks of crude oil, since the amount of oil stored in our Strategic Petroleum Reserve remained unchanged....this week's 7,000 barrel per day decrease in our crude oil production resulted from a 22,000 barrel per day decrease in oil output from Alaska, which was partially offset by a 15,000 barrels per day increase in oil output from wells in the lower 48 states...the 9,423,000 barrels of crude per day that were produced by US wells during the week ending August 4th was 7.4% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.6% more than the 8,445,000 barrel per day of oil output during the during the same week a year ago, while it was still 1.9% below the June 5th 2015 record US oil production of 9,610,000 barrels per day...

US oil refineries were operating at 96.3% of their capacity in using those 17,574,000 barrels of crude per day, which was up from 94.5% of capacity the prior week, and the highest refinery utilization rate in 12 years...the record amount of oil refined this week was 5.9% more than the 16,597,000 barrels of crude per day.that were being processed during week ending August 5th, 2016, when refineries were operating at 92.2% of capacity, and roughly 12% above the 10 year average of 15.75 million barrels of crude refined per day this time of year....since we have a new record for oil refining, we'll include a graphic of what that looks like below...

the above graph comes from a weekly emailed package of oil graphs from John Kemp, senior energy analyst and columnist with Reuters...the graph shows US refinery throughput in thousands of barrels per day by "day of the year" for the past ten years, with the past ten year range of our refinery throughput for any given date shown in the light blue shaded area, and the median of our refinery throughput, or the middle of the 10 year daily range, traced by the blue dashes over each day of the year....the graph also shows the number of barrels of oil refined for each week in 2016 traced weekly by a yellow line, with our year to date oil refining for 2017 represented in red...thus we can see that for most all of 2016, US oil refining was either at seasonal record highs or near the top of the average range...furthermore, we can also see that this year's oil refining has thus been beating last year's record levels by a large margin since the beginning of April, setting several record highs, each of which has subsequently been topped as the year progressed...

with the record level of oil refining, gasoline production from our refineries increased by 6,000 barrels per day to 10,301,000 barrels per day during the week ending August 4th, short of the record set two weeks ago, but still 2.0% higher than the 10,098,000 barrels of gasoline that were being produced daily during the comparable week a year ago....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 73,000 barrels per day to 5,305,000 barrels per day, which was also short of the record set 4 weeks ago, but still 11.9% more than the 4,739,000 barrels per day of distillates that were being produced during the week ending August 5th last year....

even with small increase in our gasoline production, our end of the week supply of gasoline increased by 3,424,000 barrels to 231,103,000 barrels by August 4th, the first increase in gasoline inventories in 8 weeks and the largest increase in 7 months…the major factor in the gasoline supply increase was an increase of 559,000 barrels per day to 1,108,000 barrels per day in our imports of gasoline, the most gasoline we've imported in any week since the week ending July 3rd of 2011...in addition, a drop of 45,000 barrels per day to 9,797,000 barrels per day in our domestic consumption of gasoline and a decrease of 55,000 barrels per day to 454,000 barrels per day in our gasoline exports also both contributed to the week over week increase in supplies....however, following 7 weeks of gasoline supply withdrawals prior to this week, our gasoline inventories are still 1.8% below last year’s seasonal high of 235,383,000 barrels for this week of the year, but they are now 7.2% higher than the 215,482,000 barrels of gasoline we had stored on August 7th of 2015...

even with the increase in our distillates production, our supplies of distillate fuels still dropped by 1,729,000 barrels to 147,685,000 barrels over the week ending August 4th, the 6th drop in seven weeks…that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 370,000 barrels per day to 4,510,000 barrels per day, and as our imports of distillates fell by 67,000 barrels per day to 41,000 barrels per day, the least we've imported in over a year...however, there was also a 138,000 barrel per day decrease to 1,083,000 barrels per day in our exports of distillates at the same time, more than offsetting the decrease in imports….after this week’s decrease, our distillate inventories were 2.3% lower than the 151,196,000 barrels that we had stored on August 5th, 2016, and fractionally lower than the distillate inventories of 147,806,000 barrels of distillates that we had stored on August 7th of 2015, even as they are roughly 5.7% above the 10 year average for distillates stocks for this time of the year…

finally, the big drop in our oil imports and the record level of oil refining meant our commercial crude oil inventories again shrunk, decreasing for the 16th time in the past 18 weeks, falling by another 6,458,000 barrels to 475,437,000 barrels as of August 4th, leaving us with the least oil we've had in storage since early February of 2016...thus, our oil inventories as of August 4th were also 3.6% below the 492,969,000 barrels of oil we had stored on August 5th of 2016, even as they were still 12.7% more than the 421,822,000 barrels in of oil that were in storage on August 7th of 2015...compared to historical figures at the same time of year, before our oil glut began to build up,  this week's oil supplies were still 41.7% higher than the 335,568,000 barrels of oil we had in storage on August 8th of 2014, and about 42.2% above the 10 year average of oil supplies for the first week of August ... here is a graph from John Kemp of what that looks like over the last 4 years:

This Week's Rig Count

US drilling activity decreased for the 4th time in 7 weeks during the week ending August 11th, following a string of 23 consecutive weeks of increases earlier this year, as natural gas drilling tanked while oil drilling increased....Baker Hughes reported that the total count of active rotary rigs running in the US fell by 5 rigs to 949 rigs in the week ending Friday, which was still 468 more rigs than the 481 rigs that were deployed as of the August 12th report in 2016, even though it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil increased by three rigs to 768 rigs this week, which was up by 372 oil rigs over the past year and the most oil seeking rigs deployed since April 2nd, 2015, while it was still far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations decreased by 8 rigs to 181 rigs this week, which was still 98 more rigs than the 83 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

the Gulf of Mexico rig count rose by one rig to 17 rigs this week, after falling by 7 rigs during the prior week....there were reports last week's drop was due to the movement of Tropical Storm Emily through the eastern Gulf, but since the Gulf rig count didn't recover after the storm was passed, we now doubt that was the case...the 17 rigs now active in the Gulf now matches the 17 rigs that were working in the Gulf the same week last year, but since there is also a rig drilling offshore from Alaska this year, this week's total US offshore rig count of 18 rigs is up by 1 rig from the total offshore last year..

active horizontal drilling rigs fell by 6 rigs to 801 rigs this week, the largest horizontal rig decrease since April 29th, 2016...however, this week's horizontal rig count was still up by 426 rigs from the 375 horizontal rigs that were in use in the US on August 12th of last year, while it was also still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the vertical rig count was down by 1 rig to 72 vertical rigs this week, which was still up from the 62 vertical rigs that were deployed during the same week last year...meanwhile, the directional rig count was up by 2 rigs to 76 rigs this week, which was also up from the 44 directional rigs that were deployed on August 12th of last year....

as usual, 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 producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of August 11th, the second column shows the change in the number of working rigs between last week's count (August 4th) and this week's (August 11th) count, the third column shows last week's August 4th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday 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 for the 12th of August, 2016...  

other than the major producing states shown on the above table, Mississippi also saw a rig added this week, and they now have two rigs drilling in the state, which is still down from the 3 rigs they had deployed last August 12th..

 

note: there's more here:

oil prices retreat on rising OPEC output; US burns more gasoline than in any other week in our history

oil prices were up three out of 5 trading sessions last week but still ended fractionally lower than where they started, mostly on a report that OPEC had increased its output....building on last week's 8.6% rally to $49.71 a barrel, the largest price increase this year, WTI oil for September delivery was up another 46 cents on Monday, closing above $50 for the first time in 2 months, and ending July with the largest monthly gain since April 2016, on reports that the US was preparing sanctions against the Venezuelan oil industry...that $50 level didn't hold, however, as oil prices tumbled more than 3% on Tuesday after a Reuters survey found that OPEC oil output was up by 90,000 barrels per day in July to a 2017 high, with US crude ending the day down $1.01 to $49.16 a barrel...oil prices then recovered 43 cents to $49.59 a barrel on Wednesday after the weekly EIA report showed another decrease in US crude oil supplies and the largest weekly burn of gasoline in US history...oil prices then gave up early gains to trade lower Thursday afternoon, after legendary oil trader Andy Hall (known as "God") was forced to shutter his hedge fund due to low oil prices, with light sweet crude for delivery in September falling 56 cents, or 1.1%, at $49.03 a barrel, after trading as high as $49.96 early in the day...oil prices continued falling Friday morning, dropping as low as $48.50 a barrel, but then recovered Friday afternoon to close at $49.58 a barrel, after Baker Hughes reported the largest rig count drop since January of this year, with oil thus ending the week just 13 cents lower, easing less than a third of a percent from last week's close...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending July 28th, indicated another increase in the amount of oil used by US refineries, but a larger increase in our imports of crude, accompanied by a decrease in our exports of it, which together meant that much less oil was withdrawn from our commercial stocks of crude oil to meet this week's needs than the prior one...our imports of crude oil rose by an average of 209,000 barrels per day to an average of 8,253,000 barrels per day during the week, while at the same time our exports of crude oil fell by 328,000 barrels per day to an average of 702,000 barrels per day, which meant that our effective imports netted out to 7,551,000 barrels per day during the week, 537,000 barrels per day more than during the prior week...at the same time, our field production of crude oil rose by 20,000 barrels per day to an average of 9,430,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 16,981,000 barrels per day during the cited week...

during the same week, refineries used 17,408,000 barrels of crude per day, 123,000 barrels per day more than they used during the prior week, while at the same time 218,000 barrels of oil per day were being pulled out of oil storage facilities in the US (down from the withdrawal of 1,030,000 barrels of oil per day the prior week)....thus, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production, and from storage was 209,000 fewer barrels per day than what refineries reported they used during the week...to account for that discrepancy, the EIA needed to insert a (+209,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as "unaccounted for crude oil"...

details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,976,000 barrels per day, which was still 3.8% below the imports of the same four-week period last year...the 218,000 barrel per day decrease in our total crude inventories was all withdrawn from our commercial stocks of crude oil, as the amount of oil stored in our Strategic Petroleum Reserve remained unchanged....this week's 20,000 barrel per day increase in our crude oil production resulted from a 25,000 barrel per day increase in oil output from wells in the lower 48 states, which was partially offset by a 5,000 barrels per day decrease in oil output from Alaska...the 9,410,000 barrels of crude per day that were produced by US wells during the week ending July 21st was 7.5% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 10.5% more than the 8,515000 barrel per day of oil output during the during the same week a year ago, while it was still 2.1% below the June 5th 2015 record US oil production of 9,610,000 barrels per day...

US oil refineries were operating at 94.5% of their capacity in using those 17,408,000 barrels of crude per day, which was up from 94.3% of capacity the prior week, and above normal for this or any time of year...the amount of oil refined this week was also above the seasonal norm, as it was 3.3% more than the 16,852,000 barrels of crude per day.that were being processed during week ending July 29th, 2016, when refineries were operating at 93.3% of capacity, and roughly 10.5% above the 10 year average of 15.75 million barrels of crude refined per day for the fourth week of July....

even with the increase in refining, gasoline production from our refineries decreased by 98,000 barrels per day from last week's near record level to 10,295,000 barrels per day during the week ending July 28th, which was still 3.0% higher than the 9,992,000 barrels of gasoline that were being produced daily during the comparable week a year ago....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 101,000 barrels per day to 5,232,000 barrels per day, which was 5.9% more than the 4,940,000 barrels per day of distillates that were being produced during the week ending July 29th last year....

with nominal decrease in our gasoline production, our end of the week supply of gasoline decreased by 2,517,000 barrels to 227,679,000 barrels by July 28th, the 7th drop in gasoline inventories in a row....a record high level of domestic consumption of gasoline, which rose by 21,000 barrels per day to 9,842,000 barrels per day, continues to be responsible for the drop in gasoline supplies, as our gasoline exports decreased by 83,000 barrels per day to 512,000 barrels per day while our imports of gasoline decreased by 174,000 barrels per day to 549,000 barrels per day at the same time....with the decrease in our gasoline supplies, our gasoline inventories are now 4.4% below last year's seasonal high of  238,190,000 barrels for this week of the year, but are still 5.1% higher than the 216,733,000 barrels of gasoline we had stored on July 31st of 2015, and roughly 5.6% above the 10 year average of gasoline supplies for this week of the year… 

even with the increase in our distillates production, our supplies of distillate fuels still slipped  by 150,000 barrels to 149,414,000 barrels over the week ending July 28th, the 5th drop in six weeks, albeit the smallest ....factors in this week's small decrease in distillates supplies was a 71,000 barrel per day increase to 1,221,000 barrels per day in our exports of distillates, while our imports of distillates fell by 22,000 barrels per day to 108,000 barrels per day, and while the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 236,000 barrels per day to 4,140,000 barrels per day....with this week's decrease, our distillate inventories are now more than 2.4% lower than the 153,155,000 barrels that we had stored on July 29th, 2016, while they remain 3.2% higher than the distillate inventories of 144,812,000 barrels that we had stored on July 31st of 2015, and roughly 8.7% above the 10 year average for distillates stocks for this time of July...

finally, even with the net drop in oil imports, the pickup in oil refining still meant our supplies of oil in storage decreased for the 15th time in the past 17 weeks, as our commercial crude oil inventories fell by another 1,527,000 barrels to 481,888,000 barrels as of July 28th, again the least oil we've had in storage anytime this year...our oil inventories as of July 28th were also 2.0% below the 490,501,000 barrels of oil we had stored on July 29th of 2016, while they were still 13.9% more than the 423,226,000 barrels in of oil that were in storage on July 31st of 2015...compared to historical figures, before our oil glut began to build up,  this week's oil supplies were still 44.2% higher than the 334,167,000 barrels of oil we had in storage on August 1st of 2014, and 43.9% above the 10 year average of oil supplies for this time of year ...    

This Week's Rig Count

US drilling activity decreased for the 3rd time in 6 weeks during the week ending August 4th, following 23 consecutive weeks of increases earlier this year, but it appears this week's drop may have been weather related...Baker Hughes reported that the total count of active rotary rigs running in the US fell by 4 rigs to 954 rigs in the week ending Friday, which was still 490 more rigs than the 464 rigs that were deployed as of the August 5th report in 2016, even though it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil decreased by a single rig to 765 rigs this week, which was still up by 384 oil rigs over the past year, while it was still far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations decreased by 3 rigs to 189 rigs this week, which was still 108 more rigs than the 81 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

the Gulf of Mexico rig count fell by 7 rigs to 16 this week, apparently due to the movement of Tropical Storm Emily through the eastern Gulf...watching the movement of the storm, i saw nothing that i felt would threaten rigs offshore from Louisiana, but i imagine some of those rigs may have been shut down as a precaution...the 16 rigs still active in the Gulf was thus down from the 17 rigs that were working in the Gulf the same week last year, but since there is also a rig drilling offshore from Alaska this year, the total US offshore rig count of 17 rigs is the same as the total offshore last year..

active horizontal drilling rigs fell by 3 rigs to 807 rigs this week, the largest horizontal rig decrease in more than a year...however, this week's horizontal rig count was still up by 445 rigs from the 362 horizontal rigs that were in use in the US on August 5th of last year, while it was also still down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the directional rig count was also down by 3 rigs to 74 directional rigs this week, which was still up from the 44 directional rigs that were deployed during the same week last year...meanwhile, the vertical rig count was up by 2 rigs to 73 rigs this week, which was also up from the 58 vertical rigs that were deployed on August 5th of last year....

as usual, 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 producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of August 4th, the second column shows the change in the number of working rigs between last week's count (July 28th) and this week's (August 4th) count, the third column shows last week's July 28th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday 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 for the 5th of August, 2016...

obviously, with the shutdown of 7 of its Gulf of Mexico rigs, Louisiana saw the largest rig count drop this week, even as two land based rigs were added in the southern part of the state...Texas is back with the largest increase this week, adding 4 rigs despite no net change in the Permian, as the Eagle Ford in south Texas added a net of 2 rigs, its first increase in 10 weeks...the largest drop in any basin was in the Cana Woodford of Oklahoma, where three rigs were shut down, as that area of the state experienced another swarm of earthquakes this week...and despite the decrease of 3 natural gas rigs, both the Utica and Marcellus stood pat, thus meaning no change in drilling activity in Ohio, Pennsylvania, or in West Virginia...one natural gas rig was pulled out of the Eagle Ford, where 3 oil directed rigs were added, and two more natural gas rigs were removed from other basins not individually itemized by Baker Hughes, possibly from the Gulf of Mexico...otherwise, the above table is a pretty good representation of the changes that took place this week...

 

note:  there’s more here…