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

Monday, December 30, 2019

January 2020 natural gas contract expires at an all time low

oil prices rose for the 4th week in a row and for the 7th week out of eight, underpinned by reports that showed larger than expected declines in U.S. supplies of crude and its products....after rising less than 1% to $60.44 a barrel last week as a US-China trade deal rally ended in profit-taking, the benchmark price of US light sweet crude for February delivery started out lower on Monday after Kuwait and Saudi Arabia agreed to renew crude output in the shared neutral zone along their border, but recovered to end 8 cents higher at $60.52 a barrel even as the Russian Energy Minister said the OPEC-led producer group might consider easing output cuts next year...oil traded higher in thin pre-Christmas trading on Tuesday, ahead of reports forecast to show crude stockpiles shrank, after Russia said cooperation with OPEC on supply cuts would continue and settled 59 cents, or 1%, higher at $61.11 per barrel amid renewed optimism that the US and China would soon finalize their trade agreement...oil prices opened higher after the holiday on Thursday after a late Tuesday report from the American Petroleum Institute showed crude inventories fell by much more than was expected and ended 57 higher cents at $61.68 a barrel, the highest price since mid-September drone attacks on Saudi-Arabia, as US stock market indices also closed at record highs...oil prices retreated from those three-month highs early on Friday, despite upbeat economic data from China and the US and optimism over a trade deal between the two, as traders awaited the EIA's oil inventory data, but then rebounded when the EIA reported a larger than expected draw from crude supplies and managed to end the day 4 cents higher at $61.72 a barrel...oil prices thus ended with a 2.1% gain on the week and higher for the 4th week in a row, now having increased nearly 14% since the end of October....

meanwhile, natural gas prices hit all time lows for the current front month contract three times this week, despite a much larger than normal withdrawal from storage, as near record warmth across most of the nation reduced heating demand heading into January...after closing last week 1.4% higher at $2.328 per mmBTU because weather models were indicating cooler weather two weeks out, the price of natural gas for January delivery opened 3% lower on Monday and continued falling to an all time low of $2.214 per mmBTU, down 11.4 cents on the day, on expectations of lower heating demand as weather forecasts had turned warmer...the selloff continued on Tuesday as natural gas prices fell another 2% to another all time low of $2.172 per mmBTU, as ongoing warmth kept the pressure on prices...however, a drop in production and a slightly cooler forecast sparked a wave of short-covering on Thursday, as gas prices jumped 12.2 cents to $2.294 per mmBTU...however, warm weather pushed prices lower again with the delayed release of the storage report on Friday, falling 13.6 cents to $2.158 per mmBTU on the day, as trading in the January contract expired at another all time low...

with natural gas prices for delivery in January thus expiring at an all time low, we'll include a price graph of that contract to see what it's recent history looks like....the graph we have below shows the weekly price of the January 2020 natural gas contract over the past 3 years...

December 28 2019 natural gas for January

the above graph is a screenshot of the interactive weekly price chart for the January 2020 natural gas contract at Barchart.com, "the leading provider of real-time or delayed intraday stock and commodities charts and quotes", and it shows the range of prices, in dollars per mmBTU, for that January natural gas contract as a vertical bar for each week over the past 3 years...you might note that each bar has two small horizontal appendages: the one on the left is the opening price for the week the bar indicates, while the appendage on the right is the week's closing price...what we can see here is that up until May of this year, the contract price for January gas seldom sold at less than $3 per mmBTU, and up until a month ago it was seldom priced lower than $2.50 per mmBTU... now, with January arrival's imminent, the price of that gas contract has fallen to $2.158 per mmBTU, 17 cents lower than it had been priced at the end of the previous week...we should make clear that this graph shows the price of the January contract, which is historically the most expensive, and that mid-summer gas contract prices we have quoted earlier this year were occasionally lower priced...furthermore, even as January gas was falling more than 7% this week, the longer dated futures prices showed less downward movement...even the price of natural gas for February delivery, which will be quoted as "the price of natural gas" next week, only fell a net of 7.9 cents over the 4 trading days this week, and ended the week at $2.231 per mmBTU, 7.3 cents higher than January's gas price...although it did hit a contract low on Wednesday, traders priced it higher than January on the chance that winter will turn colder by then...

the natural gas storage report for the week ending December 20th from the EIA indicated that the quantity of natural gas held in storage in the US decreased by 161 billion cubic feet to 3,250 billion cubic feet by the end of the week, which still left our gas supplies 518 billion cubic feet, or 19.0% higher than the 2,732 billion cubic feet that were in storage on December 20th of last year, but 69 billion cubic feet, or 2.1% below the five-year average of 3,319 billion cubic feet of natural gas that has been in storage as of the 20th of December in recent years....the 161 billion cubic feet that were withdrawn from US natural gas storage this week was somewhat more than the average forecast for a 153 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, and quite a bit more than the average 101 billion cubic feet of natural gas that have been pulled from natural gas storage during the third week of December over the past 5 years. as well as way more than the 61 billion cubic feet withdrawal reported during the corresponding week in 2018...

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending December 20th indicated that because the increase in our net oil imports nearly matched the increased demand from refineries, we needed to pull oil out of our stored commercial supplies for the fifth time in the past fifteen weeks...our imports of crude oil rose by an average of 230,000 barrels per day to an average of 6,809,000 barrels per day, after falling by an average of 308,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 236,000 barrels per day to an average of 3,397,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,412,000 barrels of per day during the week ending December 20th, 466,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells increased by 100,000 barrels per day to 12,900,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,312,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly processing 16,980,000 barrels of crude per day during the week ending December 20th, 419,000 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 average of 782,000 barrels of oil per day were being pulled out of 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 113,000 barrels per day more than what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA inserted a (-113,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we ​have ​just transcribed...(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 6,566,000 barrels per day last week, still 11.5% less than the 7,423,000 barrel per day average that we were importing over the same four-week period last year....the 782,000 barrel per day net withdrawal from our total crude inventories was due to a withdrawal of 782,000 barrels per day from our commercially available stocks of crude oil, while the quantity oil stored in our Strategic Petroleum Reserve was unchanged......this week's crude oil production was reported to be 100,000 barrels per day higher at 12,900,000 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 12,400,000 barrels per day, while Alaska's oil production was unchanged at 481,000 barrels per day and hence added ​a rounded ​500,000 barrels per day to the rounded national total...last year's US crude oil production for the week ending December 21st was rounded to 11,700,000 barrels per day, so this reporting week's rounded oil production figure was 10.3% above that of a year ago, and 53.1% 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 93.3% of their capacity in using 16,980,000 barrels of crude per day during the week ending December 20th, up from 90.6% of capacity the prior week, and close to the recent average capacity utilization for the third week of December...however, the 16,980,000 barrels per day of oil that were refined this week were still 2.3% below the 17,350,000 barrels of crude per day that were being processed during the week ending December 21st, 2018, when US refineries were operating at 95.1% of capacity....

with the big increase in the amount of oil being refined, gasoline output from our refineries was also much higher, increasing by 429,000 barrels per day to 10,269,000 barrels per day during the week ending December 20th, after our refineries' gasoline output had increased by 87,000 barrels per day ​over ​the prior week....and with this week's big increase in gasoline output, our gasoline production was 1.2% higher than the 10,144,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 322,000 barrels per day to 5,394,000 barrels per day, after our distillates output had decreased by 156,000 barrels per day over the prior week...but even after this week's increase in distillates output, our distillates' production for the week was still 0.9% below the 5,444,000 barrels of distillates per day that were being produced during the week ending December 21st, 2018....

with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the seventh week in a row and for the 13th time in 27 weeks, rising by 1,963,000 barrels to 239,260,000 barrels during the week to December 20th, after our gasoline supplies had increased by 2,529,000 barrels over the prior week....our gasoline supplies increased by less this week because our exports of gasoline rose by 280,000 barrels per day to 870,000 barrels per day while our imports of gasoline rose by 75,000 barrels per day to 594,000 barrels per day and while the amount of gasoline supplied to US markets decreased by 108,000 barrels per day to 9,303,000 barrels per day....after this week's increase, our gasoline supplies were 2.6% higher than last December 21st's inventory level of 233,106,000 barrels, while they remained roughly 5% above the five year average of our gasoline supplies for this time of the year...

even with the increase in our distillates production, our supplies of distillate fuels decreased for the 10th time in 13 weeks and for 25th time in the past 38 weeks, but only by 152,000 barrels to 124,944,000 barrels during the week ending December 20th, after our distillates supplies had increased by 1,509,000 barrels over the prior week....our distillates supplies decreased this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 96,000 barrels per day to 4,214,000 barrels per day, and because our exports of distillates rose by 535,000 barrels per day to 1,450,000 barrels per day, while our imports of distillates rose by 70,000 barrels per day to 248,000 barrels per day....after this week's inventory decrease, our distillate supplies were 4.2% higher than the 119,902,000 barrels of distillates that we had stored on December 21st, 2018, while ​they ​slipp​ed to 8% below the five year average of distillates stocks for this time of the year...

finally, with this week's big increase in refining, our commercial supplies of crude oil in storage fell for the fifteenth time in twenty-eight weeks and for the twentieth time in 48 weeks, decreasing by 5,474,000 barrels, from 446,833,000 barrels on December 13th to 441,359,000 barrels on December 20th...but even after that decrease, our crude oil inventories were still 2% above the five-year average of crude oil supplies for this time of year, and were roughly 32% higher than the prior 5 year (2009 - 2013) average of crude oil stocks after two weeks of December, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...even though our crude oil inventories had generally been rising over this past year, except for during this summer, after generally falling until then through most of the prior year and a half, our oil supplies as of December 20th were fractionally below the 441,411,000 barrels of oil we had stored on December 21st of 2018, while remaining 1.1% above the 436,491,000 barrels of oil that we had in storage on December 22nd of 2017, but at the same time were 9.1% below the 485,449,000 barrels of oil we had in commercial storage on December 23rd of 2016...       

This Week's Rig Count

the US rig count decreased for the 16th time in the past 19 weeks over the week ending December 27th, and is now 25.7% below the count as of December 28th of last year....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 8 rigs to 805 rigs this past week, which was also down by 278 rigs from the 1083 rigs that were in use as of the December 28th report of 2018, and 1,124 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...

the number of rigs drilling for oil decreased by 8 rigs to 656 oil rigs this week, which was also 208 fewer oil rigs than were running a year ago, and much less than the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...​.​at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 125 natural gas rigs, matching last week's 3 year low for natural gas drilling, down by 73 gas rigs from the 198 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 September 7th, 2008...in addition to those rigs drilling for oil & gas, three rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, one in Washoe County, Nevada, and one in Lake County, California, in contrast to a year ago, when there were no such "miscellaneous" rigs deployed..

offshore drilling activity in the Gulf of Mexico decreased by one rig to 23 rigs this week, as one of the rigs that had been drilling offshore from Louisiana was shut down this week...as a result, the 22 rigs that continued drilling in Louisiana waters plus the one that was drilling offshore from Texas was down by one from the Gulf of Mexico rig count of 24 rigs a year ago, when 23 rigs were drilling offshore from Louisiana waters and one rig was drilling in Texas waters...since there are no rigs deployed off US shores elsewhere, nor were there a year ago, the Gulf of Mexico count for this year and last is equal to the national total in both cases..

the count of active horizontal drilling rigs was down by 3 rigs to 703 horizontal rigs this week, which was 242 fewer horizontal rigs than the 945 horizontal rigs that were in use in the US on December 21st of last year, and also well 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 7 rigs to 49 vertical rigs this week, and those were also down by 19 from the 68 vertical rigs that were operating during the ​last full week of last year....on the other hand, the directional rig count was was up by 2 to 53 directional rigs this week, but those were still down by 17 from the 70 directional rigs that were in use on December 28th of 2018...

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of December 27th, the second column shows the change in the number of working rigs between last week's count (December 20th) and this week's (December 27th) count, the third column shows last week's December 20th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 28th of December, 2018...   

December 27 2019 rig count summary

much of this week's drilling decrease virtually reverses the increases we saw last week, which certainly must be coincidental, since no one would be starting rigs one week just to shut them down the next...for rigs drilling in the Texas Permian, which saw a 13 rig increase last week, a net of seven rigs were shut down in Texas Oil District 8, or the core Permian Delaware, two more rigs were pulled out of Texas Oil District 8A, or from the northern Permian Midland, and another rig was pulled out of Texas Oil District 7C, or the southern part of the Permian Midland...in addition, another 2 rigs were pulled out of Texas Oil District 7B, which is usually thought of as east of the main Permian, but which had at least three Permian basin rig additions last week....since the net decrease in the Permian was just nine rigs, and since the two rigs added in New Mexico were likely Permian rigs, we can figure that at least one of the rigs in those 4 Texas ​'Permian' ​districts was not targeting the Permian, but without digging thru the North America Rotary Rig Count Pivot Table (xls) for the individual well records, we can't say for sure which, at least on the basis of the summaries we're provided with...we're also left somewhat in the dark about what changes happened in Oklahoma, which saw a net one rig increase despite the two rig decrease in the Cana Woodford, hence meaning that three rigs began operating in the state outside of the 5 Oklahoma basins tracked​ & summarized​ here by Baker Hughes...the week's natural gas rigs changes, however, are pretty straight forward; one natural gas rig was shut down in the Haynesville, in Texas Oil District 6, just across the border from the core Haynesville shale in northern Louisiana, while a natural gas rig began operating in Pennsylvania's Marcellus at the same time...we should also note that another rig was shut down in Mississippi this week, leaving the state with 3 rigs operating, down from the 6 rigs that were operating in Mississippi a year ago, although as we've noted, the rig count in Mississippi has been quite volatile, ranging from 1 rig to 6 rigs and back again over the past year... 

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Note: there's more here...

Sunday, December 22, 2019

Nov. had largest fracking drop in 57 months; natural gas rigs fell to 3 year low while oil rigs rose most in 22 months

oil prices hit three month highs on three days this week on their way to rising for the 6th time in seven weeks, but gave up most of their gains for the week in Friday profit taking ahead of the holidays...after rising 1.5% to a three month high at $60.07 a barrel on hopes for a US-China trade deal last week, the benchmark price of US light sweet crude for January delivery opened lower and slipped to $59.17 as confidence about the U.S.-China trade deal was tempered by the agreement’s limited nature and lack of details, but then recovered later in the session to settle 14 cents higher at a three-month closing high of $60.21 a barrel on renewed trade optimism boosted by ​​the better U.S. manufacturing and services data released earlier...oil prices then moved higher for a fourth consecutive day on Tuesday in a positive response to further details on the trade agreement between the U.S. and China and finished 73 cents higher at another 3 month high of $60.94 a barrel after Trump's economic adviser Larry Kudlow predicted U.S. exports to China would double under the deal...after a Tuesday evening report from the API indicated surprise large build of crude inventories, oil prices opened lower on Wednesday​, ​but recovered midday after the EIA reported crude oil inventories had actually decreased by an expected 1.1 million barrels and ended down just a penny at $60.93 a barrel ...oil prices were back at three-month highs ​again ​on Thursday as thawing US-China trade relations supported financial markets, as trading in the January oil contract ended 29 cents higher at $61.22 ​a barrel, ​while the contract for February US oil finished 33 cents higher at $61.18 a barrel...however, oil prices moved sharply lower on Friday after Baker Hughes reported that the number of active U.S. rigs drilling for oil rose by 18, the biggest jump in 22 months, and as oil traders took profits ahead of upcoming holidays and oil ended down 74​ cents​, or 1.2%, at $60.44 a barrel...nonetheless, oil prices still finished up slightly for the week, with US crude 37​ ​cents or less than one percent ​higher ​when compared to last Friday’s close, while the February oil contract was 46 cents ​higher ​on the week...

natural gas prices also ended a bit higher this week, after hitting an all time low the prior Monday...after recovering from $2.158 per mmBTU to close the week 1.6% lower at $2.296 per mmBTU last week, the price of natural gas for January delivery rose 4.5 cents to $2.341 per mmBTU on Monday on forecasts confirming cold weather and high heating demand this week, despite an outlook showing next week would be warmer than previously expected...but trading on the longer term forecast came to the fore on Tuesday, as natural gas prices slid 2.2 cents, and then fell another 3.3 cents on Wednesday as a forecast for this December's total demand (GWDD) to be very close to the warm December of a year ago hit prices again....prices even fell another 1.3 cents on Thursday, despite an EIA report that withdrawals from natural gas inventories were much greater than expected...but natural gas prices reversed on Friday when the forecasts did, rising 5.5 cents to close the week 1.4% higher at $2.328 per mmBTU, as weather models began to feature colder changes through early January...

the natural gas storage report for the week ending December 13th from the EIA indicated that the quantity of natural gas held in storage in the US decreased by 107 billion cubic feet to 3,411 billion cubic feet by the end of the week, which left our gas supplies ​still ​618 billion cubic feet, or 22.1% higher than the 2,793 billion cubic feet that were in storage on December 13th of last year, but 9 billion cubic feet, or 0.3% below the five-year average of 3,420 billion cubic feet of natural gas that have been in storage as of the 13th of December in recent years....the 107 billion cubic feet that were withdrawn from US natural gas storage this week was somewhat more than the average forecast for a 93 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, but was below the average 112 billion cubic feet of natural gas that have been pulled from natural gas storage during the second week of December over the past 5 years. as well as ​below ​the 132 billion cubic feet withdrawal reported during the corresponding week in 2018...

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending December 13th indicated that because of an increase in our oil exports and a decrease in our oil imports, we had to pull oil out of our stored commercial supplies to meet ​our ​refining needs for the fourth time in the past fourteen weeks...our imports of crude oil fell by an average of 308,000 barrels per day to an average of 6,579,000 barrels per day, after rising by an average of 899,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 233,000 barrels per day to an average of 3,633,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,946,000 barrels of per day during the week ending December 13th, 541,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly unchanged at 12,800,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 15,746,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly processing 16,562,000 barrels of crude per day during the week ending December 13th, 35,000 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 net average of 155,000 barrels of oil per day were being pulled out of 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 still 661,000 barrels per day less than what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA inserted a (+661,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we just transcribed...however, since the media treats these figures as gospel and since they drive oil pricing and hence decisions to drill for oil, we continue to report them, just as they're seen & believed by most everyone else (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 6,411,000 barrels per day last week, still 15.1% less than the 7,549,000 barrel per day average that we were importing over the same four-week period last year....the 155,000 barrel per day net withdrawal from our total crude inventories was due to a withdrawal of 155,000 barrels per day from our commercially available stocks of crude oil, while the quantity oil stored in our Strategic Petroleum Reserve was unchanged......this week's crude oil production was reported to be unchanged at 12,800,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 12,300,000 barrels per day, while a 7,000 barrel per day decrease to 481,000 barrels per day in Alaska's oil production was not large enough to impact the final rounded​ national​ total...last year's US crude oil production for the week ending December 14th was rounded to 11,600,000 barrels per day, so this reporting week's rounded oil production figure was 10.3% above that of a year ago, and 51.9% 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 90.6% of their capacity in using 16,562,000 barrels of crude per day during the week ending December 13th, the same capacity utilization as the prior week, and well below the recent normal for the second week of December...as a result, the 16,562,000 barrels per day of oil that were refined this week was 4.9% below the 17,408,000 barrels of crude per day that were being processed during the week ending December 14th, 2018, when US refineries were operating at 95.4% of capacity....

with US refinery inputs consistently below those of a year ago, we'll include here a graph of those, so we can try to see what has been happening...

December 18 2019 refinery inputs thru December 13th

the above graph of US refinery throughput came from a newsletter emailed daily by John Kemp, senior energy analyst and columnist with Reuters, which you can sign up for free here; it 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 as a 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 2018 traced by a yellow line, with our year to date oil refining for each week of 2019 traced by the red graph...we can thus see that with a few exceptions, 2018's refining in yellow had been at the top of the historical range for most of the year, and that pace of refining in 2018 was generally beating the records set in 2017 (not shown)...however, with the sanctions imposed on Venezuelan crude at the end of January of this year, US Gulf coast refineries, which are configured to process the heavy sour crude that Venezuela produces, could not come up with adequate replacements for that crude to run at their optimum pace, and as you see, US refineries ran nearly 5% below the prior year's pace through winter and spring, ​ultimately ​buying boatloads of Urals crude from the Russians to replace the Venezuelan crude they'd lost...then, just when those refineries were starting to get back to near normal early this fall, the Keystone pipeline carrying heavy sour crude from Canada sprung a leak and was shut down, again interrupting the flow of the type of crude those refineries need to run at their optimum...there ha​s been an effort to replace that loss with releases from the Strategic Petroleum Reserve, but that was only marginally successful...but even though the Keystone pipeline has been up and running again for weeks now, US refinery utilization still continues nearly 5% below the prior year's seasonal norms......

even with the decrease in the amount of oil being refined, gasoline output from our refineries was higher, increasing by 87,000 barrels per day to 9,840,000 barrels per day during the week ending December 13th, after our refineries' gasoline output had decreased by 188,000 barrels per day the prior week....but even with this week's increase in gasoline output, our gasoline production was 4.8% lower than the 10,334,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 156,000 barrels per day to 5,072,000 barrels per day, after our distillates output had decreased by 35,000 barrels per day over the prior week...hence, after this week's decrease in distillates output, our distillates' production for the week was 6.0% below the 5,393,000 barrels of distillates per day that were being produced during the week ending December 14th, 2018....

with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 6th time in twelve weeks and for the 12th time in 26 weeks, rising by 2,529,000 barrels to 237,297,000 barrels during the week to December 13th, after our gasoline supplies had increased by 5,405,000 barrels over the prior week....our gasoline supplies increased by less this week even though our exports of gasoline fell by 326,000 barrels per day to 590,000 barrels per day, because our imports of gasoline fell by 60,000 barrels per day to 519,000 barrels per day and because the amount of gasoline supplied to US markets increased by 529,000 barrels per day to 9,411,000 barrels per day....after this week's increase, our gasoline supplies were 3.1% higher than last December 14th's inventory level of 230,103,000 barrels, while they remained roughly 5% above the five year average of our gasoline supplies for this time of the year...

even with the decrease in our distillates production, our supplies of distillate fuels rose for the 3rd time in 12 weeks and for 13th time in the past 37 weeks, increasing by 1,509,000 barrels to 125,096,000 barrels during the week ending December 13th, after our distillates supplies had increased by 4,118,000 barrels over the prior week...the increase in our distillates supplies was less this week ​because ​the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 389,000 barrels per day to 4,120,000 barrels per day, while our exports of distillates fell by 156,000 barrels per day to 915,000 barrels per day, and while our imports of distillates rose by 16,000 barrels per day to 178,000 barrels per day....after this week's inventory increase, our distillate supplies were 4.3% higher than the 119,900,000 barrels of distillates that we had stored on December 14th, 2018, while remaining 7% below the five year average of distillates stocks for this time of the year...

finally, this week's decrease in oil imports, combined with the increase in oil exports, meant our commercial supplies of crude oil in storage fell for the fourteenth time in twenty-seven weeks and for the nineteenth time in 47 weeks, decreasing by 1,085,000 barrels, from 447,918,000 barrels on December 6th ​to​ 446,833,000 barrels on December 13th...even after that decrease, our crude oil inventories ​were nearly 4% above the five-year average of crude oil supplies for this time of year, and ​were over 34% higher than the prior 5 year (2009 - 2013) average of crude oil stocks after two weeks of December, 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 had generally been rising over this past year, except for the summer, after generally falling until then through most of the prior year and a half, our oil supplies as of December 13th were still 1.2% above the 441,457,000 barrels of oil we had stored on December 14th of 2018, and 2.4% above the 436,491,000 barrels of oil that we had in storage on December 15th of 2017, but at the same time were 8.0% below the 485,449,000 barrels of oil we had in commercial storage on December 16th of 2016...      

This Week's Rig Count

the US rig count increased for just the 2nd time in the past 18 weeks over the week ending December 20th, but still remains 24.9% below the count at the end of last year....Baker Hughes reported that the total count of rotary rigs running in the US increased by 14 to 813 rigs this past week, which was still down by 267 rigs from the 1080 rigs that were in use as of the December 21st report of 2018, and 1,116 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...

the number of rigs drilling for oil increased by 18 rigs to 667 oil rigs this week, which was the biggest oil rig increase since February 9 2018, but still left 198 fewer oil rigs than were running a year ago, and much less than 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 4 rigs to 125 natural gas rigs, which was the least number of natural gas rigs deployed since December 9th, 2016, an hence a 3 year low for natural gas drilling, down by 72 gas rigs from the 197 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 September 7th, 2008...in addition to those rigs drilling for oil & gas, three rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, one in Washoe County, Nevada, and one in Lake County, California, in contrast to a year ago, when there were no such "miscellaneous" rigs deployed..

offshore drilling activity in the Gulf of Mexico increased by one rig to 24 rigs this week, with the addition of another rig in Louisiana waters...as a result, the 23 rigs that are drilling in Louisiana waters plus the one that was drilling offshore from Texas this week matches the Gulf of Mexico rig count of a year ago, when 23 rigs were drilling offshore from Louisiana waters and one rig was drilling in Texas waters...since there are no rigs deployed off US shores elsewhere, nor were there a year ago, the Gulf of Mexico count for both years is also equal to the national total in both cases..

in addition to the rigs drilling in offshore waters, one rig also started drilling through an inland body of water in southern Louisiana this week, the first such inland waters rig in 7 weeks...however, that was still down by 2 from the inland waters count of a year ago, when three such rigs were drilling in southern Louisiana...

the count of active horizontal drilling rigs was up by 13 rigs to 706 horizontal rigs this week, which was still 234 fewer horizontal rigs than the 940 horizontal rigs that were in use in the US on December 21st 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 up by 2 to 56 vertical rigs this week, but those were still down by 13 from the 69 vertical rigs that were operating during the same week of last year....on the other hand, the directional rig count was was down by 1 to 51 directional rigs this week, and those were down by 20 from the 71 directional rigs that were in use on December 21st of 2018...

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of December 20th, the second column shows the change in the number of working rigs between last week's count (December 13th) and this week's (December 20th) count, the third column shows last week's December 13th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 21st of December, 2018...  

December 20 2019 rig count summary

as you can see from the above, the return of oil rigs to Texas's Permian and Eagle Ford was what made the difference this week, in contrast to the falling rig count we've seen over most of this past year...25 oil rigs were started up in those two basins alone, while 4 natural gas rigs were shut down at the same time, with three of those gas rigs​ ​coming out of the Eagle Ford, which has 3 natural gas rigs remaining, while the Permian saw it's only natural gas rig stacked...meanwhile, a net of ten rigs were added in Texas Oil District 8, or the core Permian Delaware, and another 5 rig​s​ began operating in Texas Oil District 7B, which is usually thought of as east of the main Permian play but which now has 6 rigs deployed...with another rig added in New Mexico, we can figure that two of that total of 16 rigs were not actually targeting the Permian, but outside of digging thru the North America Rotary Rig Count Pivot Table (xls) for the individual well records, we can't say for sure which ones on the basis of the summaries we're provided with...outside of the natural gas rigs pulled from those two Texas basins, another gas rig was shut down in Pennsylvania's Marcellus, while a natural gas rig was added in a basin not tracked separately by Baker Hughes (most likely in Louisiana or Oklahoma, as those are the states with unaccounted for increases)...we should also note that another rig was shut down in Mississippi this week, and the state now has 4 rigs operating, which puts their count below the 6 rigs that were operating in Mississippi a year ago, a reversal from last week when the year ago total was lower, as the rig count in Mississippi has been quite volatile, ranging from 1 ​rig ​to 6 rigs and back again over the past year...

DUC well report for November

Monday of this past week saw the release of the EIA's Drilling Productivity Report for December, which includes the EIA's November data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the ninth month in a row, this report showed a decrease in uncompleted wells nationally in November, as both drilling of new wells and completions of drilled wells decreased.....for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 131 wells, falling from a revised 7,705 DUC wells in October to 7,574 DUC wells in November, which now represents 2.1% fewer DUCs than the 7,740 wells that had been drilled but remained uncompleted as of the end of November of a year ago...this month's DUC decrease occurred as 1,069 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during November, down by 36 from the 1,148 wells that were drilled in October and the lowest ​number drilled ​since June 2017, while 1,200 wells were completed and brought into production by fracking, a decrease of 155 well completions from the 1,355 completions seen in October and the least completions since January, and the largest drop in completions since February 2015....at the November completion rate, the 7,574 drilled but uncompleted wells left at the end of the month now represents a 6.3 month backlog of wells that have been drilled but are not yet fracked, up from the 5.6 month backlog of a month ago...  

both oil producing regions and natural gas producing regions saw DUC well decreases in November, while 2 of the major basins saw ​minor DUC increases...the number of DUC wells remaining in the Oklahoma Anadarko decreased by 58, falling from 737 at the end of October to 679 DUC wells at the end of November, as 61 wells were drilled into the Anadarko basin during November while 119 Anadarko wells were being fracked....meanwhile, DUC wells in the Eagle Ford of south Texas decreased by 24, from 1,421 DUC wells at the end of October to 1,397 DUCs at the end of November, as 154 wells were drilled in the Eagle Ford during November, while 178 already drilled Eagle Ford wells were completed....in addition, the Permian basin of west Texas and New Mexico saw its total count of uncompleted wells fall by 20, from 3,579 DUC wells at the end of October to 3,559 DUCs at the end of November, as 468 new wells were drilled into the Permian, while 488 wells in the region were being fracked....at the same time, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 10 to 490, as 160 Niobrara wells were drilled in November while 170 Niobrara wells were completed....on the other hand, DUC wells in the Bakken of North Dakota increased by 2, from 758 DUC wells at the end of October to 760 DUCs at the end of November, as 100 wells were drilled into the Bakken in November, while 98 of the drilled wells in that basin were being fracked...

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 25 wells, from 497 DUCs at the end of October to 472 DUCs at the end of November, as 81 wells were drilled into the Marcellus and Utica shales during the month, while 106 of the already drilled wells in the region were fracked....however, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 4 wells to 217, as 45 wells were drilled into the Haynesville during November, while 41 Haynesville wells were fracked during the same period....thus, for the month of November, DUCs in the five ​major ​oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 110 wells to 6,885 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 21 wells to 689 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...

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note: there's more here....

Sunday, December 15, 2019

November oil shortage at 1.17 million barrels per day; January natural gas hits another all time low

oil prices rose for the 5th time in 6 weeks to close at a three month high this week, as renewed hopes for a US-China trade deal powered a late week rally....after rising 7.3%, or more than $4 to $59.20 a barrel after OPEC and other oil producers agreed to deeper output cuts last week, oil traders took some profits on Monday ahead of Trump's China tariff deadline and the price of the benchmark US crude for January delivery slipped 18 cents to settle at $59.02 per barrel after Chinese data showed their overall exports of goods and services shrank for a fourth straight month, highlighting the economic impact of the ongoing trade war...oil prices slid again early on Tuesday on concerns over the shrinking global demand outlook, but turned higher in the afternoon to settle 22 cents higher at $59.24 per barrel, as OPEC’s deal with other producers to deepen output cuts continued to provide a floor for prices...however, oil prices fell early on Wednesday after industry data showed a surprise build in US crude oil inventory and then continued downward to close 48 cents lower at $58.76 per barrel after the EIA confirmed an inventory increase, along with large builds in product supplies...however, oil prices steadied on Thursday as the market mood switched back to relief, after OPEC forecast a supply deficit next year, even before their cuts kick in, with US crude rising 42 cents to settle at $59.18 a barrel, buoyed by reports of progress on the U.S.-China trade front and optimism after US & European central banks signaled a willingness to keep interest rates low and maintain economic stimulus for the foreseeable future....signs of further progress on US-China trade and a big conservative victory in UK elections then powered oil prices higher on Friday, as US crude rose 89 cents to finish the week with a 1.5% gain at $60.07 a barrel, two days short of a three month high...

natural gas prices, meanwhile, finished lower after the current contract ​price ​hit another all time low on Monday...after finishing at $2.334 per mmBTU last week, 2.3% higher than it's all time low of $2.281 per mmBTU of the previous Friday, the price of natural gas for January delivery gapped lower on Sunday evening and fell to as low as $2.158 before rebounding to finish at $2.232 per mmBTU, as last week's forecast for an outbreak of cold gave way to a forecast of milder weather for ​a broad area of ​the nation's midsection heading into Christmas week...prices rebounded a bit on Tuesday, rising 3.2 cents, but fell back 2.1 cents again on Wednesday...prices then recovered 8.5 cents on Thursday after the natural gas storage report revealed a larger than average withdrawal from inventories, but fell back 3.2 cents on Friday to end the week at $2.296 per mmBTU, down 1.6% from the prior week's close..

the natural gas storage report for the week ending December 6th from the EIA indicated that the quantity of natural gas held in storage in the US decreased by 73 billion cubic feet to 3,518 billion cubic feet by the end of the week, which left our gas supplies 593 billion cubic feet, or 20.3% higher than the 2,925 billion cubic feet that were in storage on December 6th of last year, but still 14 billion cubic feet, or 0.4% below the five-year average of 3,532 billion cubic feet of natural gas that have been in storage as of the 6th of December in recent years....the 73 billion cubic feet that were withdrawn from US natural gas storage this week was near the average forecast of a 74 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, but was above the average 68 billion cubic feet of natural gas that have been pulled from natural gas storage during the first week of December over the past 5 years...

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending December 6th indicated that because of a big increase in our oil imports and a modest pullback the amount of oil being used by our refineries, we managed to end up with surplus oil to add to our stored commercial supplies for the tenth time in the past thirteen weeks...our imports of crude oil rose by an average of 899,000 barrels per day to an average of 6,887,000 barrels per day, after fa​lli​ng by an average of 201,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 265,000 barrels per day to an average of 3,400,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,487,000 barrels of per day during the week ending December 6th, 634,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells reportedly fell by 100,000 barrels per day to 12,800,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,287,000 barrels per day during this reporting week..

meanwhile, US oil refineries were reportedly processing 16,597,000 barrels of crude per day during the week ending December 6th, 201,000 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 net average of 90,000 barrels of oil per day were being added to 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 and from oilfield production was 399,000 barrels per day less than what was added to storage plus what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA inserted a (+399,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we just transcribed....(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 6,259,000 barrels per day last week, still 17.4% less than the 7,582,000 barrel per day average that we were importing over the same four-week period last year....the 90,000 barrel per day net addition our total crude inventories ​was due to a 118,000 barrel per day addition to our commercially available stocks of crude oil, which was slightly offset by a withdrawal of 28,000 barrels per day from our Strategic Petroleum Reserve......this week's crude oil production was reported to be 100,000 barrels per day lower at 12,800,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was ​1​00,000 barrels per day lower at 12,300,000 barrels per day, while a 8,000 barrel per day decrease to 480,000 barrels per day in Alaska's oil production was not large enough to impact the final rounded total...last year's US crude oil production for the week ending December 7th was rounded to 11,600,000 barrels per day, so this reporting week's rounded oil production figure was 10.3% above that of a year ago, and 51.9% 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 90.6% of their capacity in using 16,597,000 barrels of crude per day during the week ending December 6th, down from 91.9% of capacity the prior week, and well below the ​recent normal for the first week of December...as a result, the 16,597,000 barrels per day of oil that were refined this week was 4.8% below the 17,436,000 barrels of crude per day that were being processed during the week ending December 7th, 2018, when US refineries were operating at 95.1% of capacity....

with the decrease in the amount of oil being refined, gasoline output from our refineries was ​also lower, decreasing by 188,000 barrels per day to 9,753,000 barrels per day during the week ending December 6th, after our refineries' gasoline output had decreased by 114,000 barrels per day the prior week....and with this week's decrease in gasoline output, our gasoline production was 6.7% lower than the 10,457,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 35,000 barrels per day to 5,228,000 barrels per day, after our distillates output had increased by 188,000 barrels per day over the prior week...likewise, after this week's decrease in distillates output, our distillates' production for the week was 5.7% below the 5,545,000 barrels of distillates per day that were being produced during the week ending December 7th, 2018....

however, even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 5th time in eleven weeks and for the 11th time in 25 weeks, rising by 5,405,000 barrels to 234,768,000 barrels during the week to December 6th, after our gasoline supplies had increased by 3,385,000 barrels over the prior week....our gasoline supplies increased by more this week because our imports of gasoline rose by 180,000 barrels per day to 579,000 barrels per day while our exports of gasoline rose by 43,000 barrels per day to 916,000 barrels per day, and because the amount of gasoline supplied to US markets decreased by 150,000 barrels per day to 8,882,000 barrels per day....after this week's increase, our gasoline supplies were 2.8% higher than last December 7th's inventory level of 228,337,000 barrels, while ​they rose to roughly 5% above the five year average of our gasoline supplies for this time of the year...

likewise, even with the decrease in our distillates production, our supplies of distillate fuels rose for the 3rd time in 12 weeks and for 13th time in the past 37 weeks, increasing by 4,118,000 barrels to 123,587,000 barrels during the week ending December 6th, after our distillates supplies had increased by 3,063,000 barrels over the prior week...our distillates supplies rose more this week because our exports of distillates fell by 341,000 barrels per day to 1,071,000 barrels per day while our imports of distillates rose by 19,000 barrels per day to 162,000 barrels per day, while the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 175,000 barrels per day to 3,731,000 barrels per day....but even after this week's inventory increase, our distillate supplies were still 0.4% lower than the 124,137,000 barrels of distillates that we had stored on December 7th, 2018, even as they rose to 9% below the five year average of distillates stocks for this time of the year...

finally, this week's big jump in oil imports, combined with the slump in​ our​ oil refining, meant our commercial supplies of crude oil in storage rose for the thirteenth time in twenty-six weeks and for the twenty-eighth time in 46 weeks, increasing by 822,000 barrels, from 447,096,000 barrels on November 29th to 447,918,000 barrels on December 6th...after that ​relatively ​small increase, our crude oil inventories remained roughly 3% above the five-year average of crude oil supplies for this time of year, and 34% higher than the prior 5 year (2009 - 2013) average of crude oil stocks at the end of November, 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 had generally been rising over this year up until July, after generally falling until then through most of the prior year and a half, our oil supplies as of December 6th were still 1.3% above the 441,954,000 barrels of oil we had stored on December 7th of 2018, and 1.1% above the 442,986,000 barrels of oil that we had in storage on December 8th of 2017, but at the same time were 7.3% below the 483,193,000 barrels of oil we had in commercial storage on December 9th of 2016...     

OPEC's Monthly Oil Market Report

Wednesday of this past week saw the release of OPEC's December Oil Market Report, which covers OPEC & global oil data for November, and hence it gives us a snapshot of ​the ​global oil supply & demand ​situation just before the December 6th OPEC meeting, when total production cuts of up to 2.1 million barrels per day, or more than 2% of global supply, were announced...but as we'll see, this report shows there was already a shortfall of more than 1% in the amount of oil produced globally in November, even ​though it was less than the large shortfalls seen in October and ​during this summer...

the first table from this monthly report that we'll look at is from the page numbered 58 of that report (pdf page 70), 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 impartially adjudicating 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...

November 2019 OPEC crude output via secondary sources

as we can see from the above table of oil production data, OPEC's oil output fell by 193,000 barrels per day to 29,551,000 barrels per day in November, from their revised October production total of 29,744,000 barrels per day...however that October output figure was originally reported as 29,650,000 barrels per day, which means that OPEC's October production was revised 94,000 barrels per day higher, and hence November's production was, in effect, a 287,000 barrel per day decrease from the previously reported OPEC production figures (for your reference, here is the table of the official October OPEC output figures as reported a month ago, before this month's revisions)...

​from this table, ​we can also see that a 151,000 barrel per day decrease in production by the Saudis, a 75,000 barrel per day decrease in production by Angola, a 59,000 barrel per day decrease in production by Iraq, and a 45,000 barrel per day decrease in production by Iran were the major reasons for OPEC's November output drop, more than offsetting increases of 73,000 barrels per day in output from Ecuador and 58,000 barrels per day in output from Kuwait, while the oil output from most other OPEC members was comparatively little changed....we should also note that the 73,000 barrels per day increase in Ecuador's production was only a partial recovery of their October output decrease, when violent protests over an end to fuel subsidies reduced their production...

with this report, the Saudi's production, and production from most other OPEC members other than Iraq and Nigeria, remains below the output allocation as originally determined for each OPEC 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 little over five months ago...this can be seen in the table of OPEC production allocations we've included below:

February 6 2019 Platts on OPEC allocations

in addition to those cuts, at their meeting with other oil producers on December 6th of this year, OPEC announced additional production cuts of 500,000 barrels per day through to March 2020 on top of those figures, a breakdown of which we have in a table from OPEC below:

OPEC additional supply cuts as of December 2019

the above table was posted on OPEC's website after their December 6th meeting, and it shows the additional production cuts each of the OPEC members and their allies among other producers are expected to make over the 3 month​ period​ beginning January...as you see, the heaviest cuts fall on the core OPEC members of Saudi Arabia. the United Arab Emirates, Kuwait and Iraq, while embargoed Iran and Venezuela remain exempt...obviously, the table would be more meaningful if their current production, or even their expected end production, were included, but i've been unable to find a table with those important details, so we'll just have to make do switching back and forth between the two tables we have to see how each member is impacted....in addition to those cuts that came out of the OPEC meeting, the Saudis voluntarily pledged to cut an additional 400,000 barrels a day than mandated by the December 6th agreement, bringing the total cut for the group to 2.1 million barrels a day, or more than 2% of global output....

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 December 2017 to November 2019, and it comes from page 59 (pdf page 71) of the December 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...  

November 2019 OPEC report global oil supply

even after the 193,000 barrel per day decrease in OPEC's production from what they produced a month ago, OPEC's preliminary estimate indicates that total global oil production increased by a rounded 0.41 million barrels per day to 99.78 million barrels per day in November, and that reported increase came after October's total global output figure was revised up by 30,000 barrels per day from the 97.34 million barrels per day of global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 610,000 barrels per day in November after that revision, with higher oil production from the US, Canada, Norway, the UK, Russia, and Azerbaijan the major ​​reasons for the non-OPEC output increase in November...despite that increase in November 's output, the 99.78 million barrels of oil per day produced globally in November were still 0.86 million barrels per day, or 0.85% lower than the 100.64 million barrels of oil per day that were being produced globally in November a year ago (see the December 2018 OPEC report (online pdf) for the originally reported October 2018 details)...with this month's decrease in OPEC's output, their November oil production of 29,551,000 barrels per day fell to 29.6% of what was produced globally during the month, down from the 29.9% share ​OPEC contributed in October....OPEC's November 2018 production was reported at 32,965,000 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, produced 3,119,000 fewer barrels per day of oil than what they produced a year ago, when they accounted for 32.8% of global output, with a 1,166,000 barrel per day decrease in output from Saudi Arabia, a 852,000 barrel per day drop in the output from Iran, and a 440,000 barrel per day decrease in the output from Venezuela from that time more than offsetting the ​much ​small​er​ year over year production increases of 144,000 barrels per day by the United Arab Emirates, 84,000 barrels per day by Libya, and 62,000 barrels per day by Nigeria... 

even with the 410,000 barrels per day increase in global oil output that was seen during November, there was a substantial shortfall in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...     

November 2019 OPEC report global oil demand

the table above came from page 31 of the December 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 fifth column, we've circled in blue the figure that's relevant for November, which is their estimate of global oil demand during the fourth quarter of 2019...

OPEC has estimated that during the 4th quarter of this year, all oil consuming regions of the globe ​are using 100.95 million barrels of oil per day, which is the same as they reported for the 4th 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 only producing 99.78 million barrels per day during November, which means that there was a shortage of around 1,170,000 barrels per day in global oil production when compared to the demand estimated for the month... 

meanwhile, the upward revision of 30,000 barrels per day to September's global output that's implied in this report means that the 1,610,000 barrels per day  shortfall that we had originally figured for October based on last month's figures would now have to be revised to a deficit of 1,580,000 barrels per day...however, since there are no revisions to previous months, that means the supply deficit and surplus figures that we had figured last month will not be changed from what we had logged then...those include a deficit of 3,030,000 barrels per day for September (following the September 14th drone attack on Saudi oil infrastructure), a 1,670,000 barrels per day shortfall in August, and a 2,290,000 barrels per day shortfall in July..

looking ahead, we expect that OPEC and other oil producers will cut production come January as promised, since most of the countries committed to the largest cuts normally produce less oil in winter anyhow​,​ because their domestic demand is lower​ at that time​....while the November shortfall of 1.17 million barrels per day would lead one to believe that the oil shortage would only get worse with further cuts, that does not appear to be the case, because global wintertime demand is typically much lower than the rest of the year, which we can see in the following estimates of global oil demand for 2020:

November 2019 OPEC report global oil demand for 2020

the table above came from page 32 of the December OPEC Monthly Oil Market Report (pdf page 44), and like the prior table, it shows regional and total oil demand in millions of barrels per day for 2019 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2020 over the rest of the table...on the "Total world" line in the second column, we've circled in green the figure that's relevant to OPEC's new cuts, which is their estimate of global oil demand during the first quarter of 2020...

as you can see, OPEC is estimating that during the 1st quarter of next year, all oil consuming regions of the globe will be using 99.7​8 million barrels of oil per day, which quite coincidentally is the same amount of oil produced globally in November...hence, if November's production from non-OPEC aligned producers merely holds steady through the first quarter, the global oil shortage will be limited to just what OPEC ​and their allies ​cut...but what's more likely is that the non-OPEC producers will continue to increase their production to replace what production OPEC is foregoing...since non-OPEC production increased by 730,000 barrels per day in October, and ​by ​610,000 barrels per day in November, that suggests that if the non-OPEC production increases continue at their current pace, the global supply deficit will turn to a surplus in January, and become larger each month as the ​year progresses...

This Week's Rig Count

the US rig count was unchanged over the week ending December 13th, after falling 15 out of the 16 prior weeks, and remains down by 26.2% since the end of last year....Baker Hughes reported that the total count of rotary rigs running in the US was unchanged at a 32 month low of 799 rigs this past week, which was also down by 272 rigs from the 1071 rigs that were in use as of the December 14th report of 2018, and 1130 fewer rigs than the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...

the number of rigs drilling for oil increased by 4 rigs to 667 oil rigs this week, which was still 206 fewer oil rigs than were running a year ago, and well 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 decreased by 4 rigs to 129 natural gas rigs, matching the 34 month low of three weeks ago, down by 69 gas rigs from the 198 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 September 7th, 2008...in addition to those rigs drilling for oil & gas, three rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, one in Washoe County, Nevada, and one in Lake County, California, in contrast to a year ago, when there were no such "miscellaneous" rigs deployed..

offshore drilling activity in the Gulf of Mexico increased by one rig to 23 rigs this week, with the addition of a new rig in Texas waters...​as a result, the 22 rigs that are drilling in Louisiana waters and ​the ​one ​thjat ​was drilling offshore from Texas this week exactly matches the Gulf rig count of a year ago, when 22 rigs were drilling offshore from Louisiana waters and one rig was drilling in Texas waters...since there are no rigs deployed off US shores elsewhere, nor were there a year ago, the Gulf of Mexico count for both years is equal to the national total in both cases..

the count of active horizontal drilling rigs was down by 2 rigs to 693 horizontal rigs this week, which was the least horizontal rigs deployed since March 31st 2017 and hence is a new 32 month low for horizontal drilling...it was also 234 fewer horizontal rigs than the 927 horizontal rigs that were in use in the US on December 14th 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 unchanged at 52 directional rigs this week, and those were down by 21 from the 73 directional rigs that were operating during the same week of last year....on the other hand, the vertical rig count was up by 2 to 54 vertical rigs this week, but those were still down by 17 from the 71 vertical rigs that were in use on December 14th of 2018...

the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of December 13th, the second column shows the change in the number of working rigs between last week's count (December 6th) and this week's (December 13th) count, the third column shows last week's December 6th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 14th of December, 2018...  

December 13 2019 rig count summary

looking at this week's table, the obvious first question one would have is how could oil rigs be up four and natural gas rigs be down 4 when the biggest increase was the 4 natural gas rigs that were added in the Marcellus shale, which included 3 new natural gas rigs in West Virginia and one ​new ​gas rig in Pennsylvania?...to begin with, ​the 2 rig reduction in ​Ohio's Utica shale count masks some of th​e change, as two oil targeting rigs were added in the Utica in the basin's first oil drilling since September 2018...drilling rigs in both Belmont and Jefferson counties, normally gas producing areas, were targeting oil in the Utica shale at a depth exceeding 15,000 feet...meanwhile, 4 natural gas rigs were pulled out of the Utica at the same time...other natural gas rigs were also removed from Texas's Barnett shale, near Ft Worth, and ​from ​the Haynesville, although it's not clear exactly​ ​where, since northern Louisiana saw a rig increase and the rig count in the adjacent Texas Oil District 6 was unchanged....meanwhile, the last two natural gas rigs shut down this week were pulled from basins not tracked separately by Baker Hughes and hence they don't show up in the basin table above...

meanwhile, even though the Permian basin of western Texas and New Mexico appears to have no change, it had quite a bit of action; for starters, four rigs were added in Texas Oil District 8, or the core Permian Delaware, and another rig began operating in Texas Oil District 8A, or from the northern Permian Midland...at the same time, three rigs were pulled out of Texas Oil District 7C, or the southern part of the Permian Midland, and another Permian rig was pulled out of the western Permian Delaware in New Mexico...the last Permian basin rig removal could have been the rig removed from Texas Oil District 7B, which is usually thought of as east of the main Permian play, or it could have also been pulled from New Mexico, if another rig had been started in another part of the state at the same time; not easy to tell, since we aren't provided with a breakout on New Mexico drilling...

we should also note that another rig was added in Mississippi this week, and the​ state now ha​s 5 rigs operating...that now puts their count above the 4 rigs that were operating in Mississippi a year ago, even as the rig count in that state has been quite volatile, ranging from 1 to 6 rigs over the past year...at the same time, drilling also began in Alabama this week, the first activity in that state in 2 months, and also up from no​ rigs in the same week of a year ago..

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note: there's more here...