Masters Of War

Come you masters of war You that build all the guns You that build the death planes You that build all the bombs You that hide behind walls You that hide behind desks I just want you to know I can see through your masks. You that never done nothin' But build to destroy You play with my world Like it's your little toy You put a gun in my hand And you hide from my eyes And you turn and run farther When the fast bullets fly. Like Judas of old You lie and deceive A world war can be won You want me to believe But I see through your eyes And I see through your brain Like I see through the water That runs down my drain. You fasten all the triggers For the others to fire Then you set back and watch When the death count gets higher You hide in your mansion' As young people's blood Flows out of their bodies And is buried in the mud. You've thrown the worst fear That can ever be hurled Fear to bring children Into the world For threatening my baby Unborn and unnamed You ain't worth the blood That runs in your veins. How much do I know To talk out of turn You might say that I'm young You might say I'm unlearned But there's one thing I know Though I'm younger than you That even Jesus would never Forgive what you do. Let me ask you one question Is your money that good Will it buy you forgiveness Do you think that it could I think you will find When your death takes its toll All the money you made Will never buy back your soul. And I hope that you die And your death'll come soon I will follow your casket In the pale afternoon And I'll watch while you're lowered Down to your deathbed And I'll stand over your grave 'Til I'm sure that you're dead.------- Bob Dylan 1963

Sunday, February 24, 2019

US oil production and oil exports at record highs; backlog of uncompleted wells remains at 7.1 months

oil prices rose on OPEC's deep supply cuts for a second week, bolstered by optimism that US and Chinese negotiators would reach a trade deal before Trump's punitive tariffs take hold on March 1st...after rising 5.4% to $55.59 a barrel last week on a report showing that OPEC had already cut its output to the agreed level, US crude contracts for March delivery rose 50 cents to $56.09 a barrel after the markets reopened on Tuesday on evidence of further OPEC production cuts and optimism about the ongoing US trade talks with China...the rally following last week's OPEC cuts continued for a sixth day in a row on Wednesday, after Trump said negotiations with China were going well and suggested he was open to extending them beyond March 1st, as the March oil contract expired 83 cents higher at $56.92 a barrel and the US crude contract for April, which had risen 47 cents on Tuesday, rose 71 cents to finish Wednesday at ​$​57.16 a barrel on hopes that output cuts and U.S. sanctions on Iran and Venezuela would bring oil markets into balance later this year...with the media reports now quoting prices for April oil, prices pushed to new 2019 highs on the supply cuts led by OPEC early Thursday but ended the day 20 cents lower at $56.96 a barrel after the EIA reported that U.S. crude supplies rose for the 5th straight week...prices rose to their highest levels this year again on Friday on hopes that the US and China could resolve their trade disputes before a March 1 deadline during negotiations this week and ended the day 30 cents higher at $57.26 a barrel, their highest close in nearly three and a half months...

natural gas prices, meanwhile, also rose for a second week, but still remained near the 10 month lows plumbed earlier this month...citing trading in the natural gas contract for March delivery all week, natural gas prices rose 3.7 cents to $2.662 per mmBTU on Tuesday as the two week forecast trended colder over the weekend and physical gas prices remained firm, but​ then​ dipped 2.6 cents on Wednesday on concerns of oversupply following several weak weekly storage numbers...gas prices jumped 6.1 cents on Thursday, however, afterthe EIA announced a slightly larger draw from storage than was expected and then added another 2 cents on Friday to end the week at $2.717 per mmBTU​,​ as weather models indicated continued colder than normal temperatures for most of the US...

the natural gas storage report for the week ending February 15th from the EIA indicated that the quantity of natural gas held in storage in the US fell by 177 billion cubic feet to 1,705  billion cubic feet over the week, which meant our gas supplies ended the period 73 billion cubic feet, or 4.1% below the 1,778 billion cubic feet that were in storage on February 16th of last year, and 362 billion cubic feet, or 17.5% below the five-year average of 2,067 billion cubic feet of natural gas that have typically remained in storage as of the the middle of February....this week's 177 billion cubic feet withdrawal from US natural gas supplies was between 5 and 35 billion cubic feet higher than ​queried Platts analysts ​foecast how much stored gas would be needed​​, and was somewhat more than the average of 148 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same winter week over the last 5 years.....as you can see on the temperature map from the EIA below, the densely populated eastern third of the US remained warmer than normal during the period, while most of the US west of the Mississippi was colder than normal, and hence used more gas than normal for mid-February...

February 23 2019 temperature departure from normal for week ending February 14

surprisingly, natural gas storage facilities in the Eastern US saw a 49 billion cubic feet draw from their supplies over the week, actually a bit more than their average 47 billion cubic foot withdrawal over the past five years, as the region's gas supply deficit ticked up to 9.8% below average for this time of year, while natural gas supplies in the Midwest fell by 56 billion cubic feet, also an increase from their normal 51 billion cubic feet pull, as their supply deficit increased to 14.0% below the normal for the middle of February...the South Central region saw a 47 billion cubic feet drop in their supplies, up from their normal 40 billion cubic foot withdrawal, as their natural gas storage deficit increased to 16.1% below their five-year average for this time of year...at the same time, 8 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region, which normally pulls out 5 billion cubic feet during this same week, as their gas supply deficit from normal rose to 33.1%, while 17 billion cubic feet of natural gas were withdrawn from storage in the Pacific region, in contrast to the 5 billion cubic feet normally withdrawn, and their natural gas supply deficit rose to 36.7% below normal for this time of year....

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending February 15th, indicated a big jump in our crude oil imports from the prior week's 22 year low, and a ​similar large jump in our oil exports, and hence another modest addition of surplus oil to our commercial supplies of crude oil....our imports of crude oil rose by an average of 1,312,000 barrels per day to an average of 7,522,000 barrels per day, after falling by an average of 936,000 barrels per day the prior week, while our exports of crude oil rose by an average of 1,243,000 barrels per day to a record average of 3,607,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,915,000 barrels of per day during the week ending February 15th, 69,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was estimated to be 100,000 barrels per day higher at a record 12,000,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 15,915,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 15,711,000 barrels of crude per day during the week ending February 15th, 57,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period 525,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....thus, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 321,000 fewer barrels per day than the oil that was added to storage plus what refineries reported they used during the week....to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+321,000) 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 is labeled in their footnotes as "unaccounted for crude oil"....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

with our crude oil exports now at a record high, we'll include a historical graph showing how they got there..

February 21 2019 crude oil exports for February 15th

the above graph of US crude oil exports came from the EIA page containing the html spreadsheet for US oil exports, which is the same page we cite each time we refer to oil export data, and it shows weekly US crude oil exports in thousands of barrels per day over the past 16 years, from early 2003 to the current week...as you can see, prior to January 2017, our oil exports were minimal, because by law they had been outlawed for 40 years, with the exception of oil exports to Mexico and Canada, which were allowed under provisions of the North American Free Trade Agreement (NAFTA)...since th​e time​ when they were permitted​, however, our exports have steadily risen, often limited by the number and size of ships that could be loaded in one week and the number of ​US ​ports which could provide such loading (which also accounts for the week to week volatility you see in the chart above)...contributing to the push to ship our oil offshore has been a price differential between US light sweet crude grades such as West Texas Intermediate, and the price of the similar North Sea Brent, the international benchmark price, which has been running close to 10% for most of the past year...as of Friday's close, Brent oil for April delivery was being quoted at $67.12 a barrel, as compared to the $57.26 a barrel pricing for April WTI...so obviously, US oil traders will continue selling as much US crude into international markets as our port capacity will allow, all the while pulling down large windfall profits even after paying the roughly $2 a barrel trans oceanic transportation costs... at the same time, our refineries are importing the usually cheaper poorer grades of heavy sour crude they need and paying a premium price for them, because of a shortage of such grades of oil due to the Venezuela embargo...

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports actually fell to an average of 6,990,000 barrels per day last week, 10.5% less than the 7,808,000 barrel per day average that we were importing over the same four-week period last year.... the 525,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported to be 100,000 barrels per day higher at a record 12,000,000 barrels per day because the rounded estimate for output from wells in the lower 48 states rose by 100,000 barrels per day to 11,500,000 barrels per day, while the 11,000 barrel per day decrease in  Alaska's oil production to 487,000 barrels per day was not enough to change the rounded national total...last year's US crude oil production for the week ending February 16th was at 10,270,000 barrels per day, so this reporting week's rounded oil production figure was 16.8% above that of a year ago, and 42.4% 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 85.9% of their capacity in using 15,711,000 barrels of crude per day during the week ending February 15th, unchanged from the prior week, which had been the lowest capacity utilization rate in 16 months....the 15,711,000 barrels per day of oil that were refined this week was the lowest refinery throughput in 16 months, 0.8% below the 15,833,000 barrels of crude per day that were being processed during the week ending February 16th, 2018, when US refineries were operating at 88.1% of capacity... 

with the reduction in the amount of oil being refined, the gasoline output from our refineries was also lower, falling by 130,000 barrels per day to 9,489,000 barrels per day during the week ending February 15th, after our refineries' gasoline output had decreased by 237,000 barrels per day the prior week....with that decrease in this week's gasoline output, our gasoline production was 6.1% lower than the 10,107,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 5,000 barrels per day to 4,759,000 barrels per day, after that output had decreased by 537,000 barrels per day the prior week....but even with that decrease, this week's distillates production was more than 6.0% above the 4,489,000 barrels of distillates per day that were being produced during the week ending February 16th, 2018.... 

with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week fell by 1,454,000 barrels to 256,847,000 barrels by February 15th, after rising by 408,000 barrels over the prior week....our gasoline supplies fell this week in part because the amount of gasoline supplied to US markets increased by 152,000 barrels per day to 8,800,000 barrels per day, after decreasing by 425,000 barrels per day the prior week, while our imports of gasoline fell by 37,000 barrels per day to 420,000 barrels per day ​and ​as our exports of gasoline fell by 147,000 barrels per day to 812,000 barrels per day...but having set a record high four weeks ago, our gasoline inventories are still at a seasonal high for the middle of February, 3.0% higher than last February 16th's level of 249,334,000 barrels, and roughly 4% above the five year average of our gasoline supplies at this time of the year...

with the decrease in our distillates production, our supplies of distillate fuels fell for the 15th time in twenty-two weeks, decreasing by 1,517,000 barrels to 138,683,000 barrels during the week ending February 15th, after our distillates supplies had increased by 1,087,000 barrels over the prior week...our distillates supplies decreased this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 449,000 barrels per day to 4,216,000 barrels per day, as demand for heat oil increased, while our exports of distillates fell by 74,000 barrels per day to 1,191,000 barrels per day, and while our imports of distillates fell by 7,000 barrels per day to 431,000 barrels per day....with this week's decrease, our distillate supplies ended fractionally below the 138,945,000 barrels that we had stored on February 16th, 2018, and remained roughly 2% below the five year average of distillates stocks for this time of the year...

finally, with rising ​oil ​imports more than offsetting record exports while ​our ​refining ​of oil ​remained at a 16 month low, our commercial supplies of crude oil in storage increased for a 5th consecutive week, rising by 3,672,000 barrels over the week, from 450,840,000 barrels on February 8th to a 15 month high of 454,512,000 barrels on February 15th...with weekly increases now in 16 out of the last 22 weeks, our crude oil inventories are roughly 6% above the five-year average of crude oil supplies for this time of year, and ​roughly 30% above the 10 year average of crude oil stocks for the middle of February, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have mostly been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of February 15th were thus 8.1% above the 420,479,000 barrels of oil we had stored on February 16th of 2018, while still remaining 12.4% below the 518,683,000 barrels of oil that we had in storage on February 17th of 2017, and 4.6% below the 476,325,000 barrels of oil we had in storage on February 19th of 2016...   

This Week's Rig Count

drilling activity in the US slowed a bit this past week, and remains below the levels of this past Fall, when both oil prices and natural gas prices were somewhat higher....Baker Hughes reported that the total count of rotary rigs running in the US fell by 4 rigs to 1047 rigs over the week ending February 22nd, which was still 69 more rigs than the 978 rigs that were in use as of the February 23rd report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil fell by 4 rigs to 853 rigs this week, which was still 54 more oil rigs than were running a year ago, while it was 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 was unchanged at 194 natural gas rigs, which was still 15 more rigs than the 179 natural gas rigs that were drilling a year ago, but way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

drilling activity from offshore platforms in the Gulf of Mexico decreased by a net of 2 rigs to 19 rigs this week, as 3 platforms offshore from Louisiana were shut down this week while one was added offshore from Texas, where there are now two rigs drilling in state waters...the 17 rigs running offshore from Louisiana is an increase of 1 from the 16 rigs active there a year ago, while the 2 Texas offshore rigs are also an increase of 1 from the single rig active in Texas waters last year at this time..

the count of active horizontal drilling rigs increased by 1 rig to 916 horizontal rigs this week, which was also 74 more horizontal rigs active than the 842 horizontal rigs that were in use in the US on February 23rd of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....on the other hand, the vertical rig count decreased by 3 rigs to 63 vertical rigs this week, which was also down by 4 rigs from the 67 vertical rigs that were in use during the same week of last year....in addition, the directional rig count decreased by 2 rigs to 68 directional rigs this week, which was also down from the 69 directional rigs that were operating on February 23rd of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of February 22nd, the second column shows the change in the number of working rigs between last week's count (February 15th) and this week's (February 22nd) count, the third column shows last week's February 15th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 23rd of February, 2018...      

February 22 2019 rig count summary

​even thought the Permian shows no net change, there was movement within the basin; Texas Oil District 8, or the core Permian Delaware, ​saw three rigs added, and there are now 31​7 rigs drilling there​, while 1 rig was pulled out of ​Texas Oil District 7C, or the southern Permian Midland, ​one rig was pulled from Texas Oil District 8A,​ ​corresponding to the northern Permian Midland​, ​and one rig was pulled from the extreme western part of ​the Permian Delaware​ in New Mexico​...the ​other ​details are rather straightforward this week, compared to some weeks of late, with the 2 rig decrease in Oklahoma accounted for by the 3 rig decrease in the Cana Woodford of central Oklahoma offset by the addition of a single rig in the Granite Wash near the Texas panhandle, while the 2 rig decrease in Louisiana is accounted for by the 3 rig decrease in the state's Gulf of Mexico waters, offset by the addition of a rig in the Haynesville shale in the northwestern part of the state....the Haynesville shale addition represents a natural gas rig, as does the addition of a rig in the Marcellus of West Virginia...those were offset by the natural gas rig that was shut down in the Barnett shale of the Dallas / Ft Worth area, and another natural gas rig that was shut down in a basin not tracked separately by Baker Hughes...

DUC well report for January

Tuesday of this past week saw the release of the EIA's Drilling Productivity Report for February, which includes the EIA's January data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the 10th month in a row, this report showed an increase in uncompleted wells nationally in January, as both drilling of new wells and completions of drilled wells increased slightly​, but drilling continued to outpace completions​....like most previous months, this month's uncompleted well increase was almost entirely due to a big increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of west​ern​ Texas​ and New Mexico​, with a modest increase of uncompleted wells in the Eagle Ford of south Texas also contributing...for all 7 sedimentary regions covered by this report, the total count of DUC wells increased by 207 wells, from a revised 8,591 DUC wells in December to 8,798 DUC wells in January, a 28.3% increase from the 6,857 wells that had been drilled but remained uncompleted as of the end of January a year ago...that was as 1,453 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during January, up by 17 from the 1,436 wells drilled in December, while 1,246 wells were completed and brought into production by fracking, a increase of 35 well completions from the 1,211 completions seen in December...at the January completion rate, the 8,798 drilled but uncompleted wells left at the end of the month represent a 7.1 month backlog of wells that have been drilled but not yet fracked...  

as has been the case for most of the past two years, the December DUC well increases were predominantly oil wells, with most of those in the Permian basin...the Permian basin saw its total count of uncompleted wells rise by 205, from 3,843 DUC wells in December to 4,048 DUCs in January, as 609 new wells were drilled into the Permian, but only 404 wells in the region were fracked...at the same time, DUC wells in the Eagle Ford of south Texas increased by 29, from 1,520 DUC wells in December to 1,561 DUCs in January, as 214 wells were drilled in the Eagle Ford during January, while 185 Eagle Ford wells were completed...over the same period, the number of DUC wells in the Anadarko basin region centered in Oklahoma increased by 4 to 1,085, as 164 wells were drilled into the Anadarko basin ​during January ​while 160 Anadarko wells were fracked....meanwhile, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range increased by 3 wells to 519, as 184 Niobrara wells were drilled in January while 181 Niobrara wells were being fracked...in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region also saw their uncompleted well inventory increase by 3 wells to 205, as 56 wells were drilled into the Haynesville during January, while 53 Haynesville wells were fracked during the same period...

on the other hand, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 22 wells, from 529 DUCs in December to 507 DUCs in January, as 116 wells were drilled into the Marcellus and Utica shales, while 138 of the already drilled wells in the region were fracked...​and ​lastly, DUC wells in the Bakken of North Dakota fell by 15, from 742 DUC wells in December to 731 DUCs in January, as 110 wells were drilled into the Bakken in January, while 125 of the drilled wells in that basin were completed....thus, for the month of January, DUCs in the 5 oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by a net of 226 wells to 8,086 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 19 wells to 712 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and natural gas...

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note: there's more here...

Sunday, February 17, 2019

oil imports at a 22 year low, refining slowest in 16 months; global oil production down a million barrels per day, still a 300,000 bpd surplus..

oil prices pushed to a three month high this week, largely on the news that OPEC had met its production cut quota in January, and was cutting oil output even further in February...after falling 4.6% to $52.72 a barrel on global trade and economic concerns last week, prices o​f US crude contracts for March delivery fell 31 cents to $52.41 on Monday, as concerns about the lack of progress in U.S.-China trade talks overshadowed price support from OPEC-led supply curbs... however, oil prices jumped to over $54 a barrel during early trading on Tuesday on an OPEC report showing they had sharply cut output in January, but faded near the close to end at $53.10 a barrel, a​n​ increase​ ​of 69 cents on the day....oil prices again rallied on the OPEC report early Wednesday, trading as high as $54.60 a barrel, but prices reversed again after the EIA reported US crude oil inventories rose to their highest since November 2017, with March oil prices ending up 80 cents, or 1.5 percent, at $53.90 a barrel...oil prices then rose on the OPEC output cuts for a third day on Thursday, but the gains were capped after a report showing the steepest decline in U.S. retail spending since 2009 heightened fears of a economic slowdown, with oil prices finishing 51 cents higher at $54.41 a barrel...however, an outage at Saudi Arabia’s largest offshore oilfield and the announcement that the Saudis would cut over half a million barrels per day more in March than the OPEC deal called for sent prices surging on Friday, with US crude rising $1.18 or 2.2% to close the week at a 3-month high of $55.59 a barrel, 5.4% higher than the previous Friday​'s​ close...at the same time, the April Brent crude oil contract price rose $1.68 on Friday to settle at $66.25 per barrel, ​finishing with a week-over-week gain of $4.15 a barrel, or 6.7%, propelled by a Russian pledge to speed up their production cuts in conjunction with the OPEC effort....

natural gas prices, meanwhile, eked out a small increase, after a cold blast at the end of the week lifted prices back into the plus column...after fall​ing ​15.1 cents to an eleven month low of $2.583 per mmBTU last week, natural gas contracted for March delivery jumped 5.9 cents on Monday, and another 4.6 cents on Tuesday, on forecasts for colder weather at the end of February...however, gas gave up those gains and fell 11.3 cents on Wednesday, when the weather models flipped back to warmer, with significantly more warm​th in the East in the 8 to 14 day forecast...after falling two tenths of a cent on a slightly bearish storage report on Thursday, natural gas prices rebounded 5.2 cents to close the week at $2.625 mmBTU, as weather models added back demand and LNG exports rose, tightening up supply balances...

the natural gas storage report for the week ending February 8th from the EIA indicated that the quantity of natural gas held in storage in the US fell by 78 billion cubic feet to 1,882 billion cubic feet over the week, which meant our gas supplies ​ended the period 30 billion cubic feet, or 1.6% below the 1,912 billion cubic feet that were in storage on February 9th of last year, and 333 billion cubic feet, or 15.0% below the five-year average of 2,215 billion cubic feet of natural gas that have typically been in storage as of the 2nd weekend in February....this week's 78 billion cubic feet withdrawal from US natural gas supplies was a bit below analyst's consensus expectation that 85 billion cubic feet of stored gas would be needed, and was quite a bit less than the average of 160 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same winter week over the last 5 years...as you can see on the temperature map from the EIA below, the densely populated Midwest, East, and South Central regions of the country were all warmer than normal during the period, and hence saw below normal withdrawals of natural gas from storage...however, it was cooler than normal in the Pacific states, where 17 billion cubic feet of gas were needed from storage, against their normal draw of 9 billion cubic feet for the first full week of February, and hence their supply deficit increased to 30.5% below the normal for this time of year...the Mountain states also saw an above normal draw of 10 billion cubic feet, against their normal 7 billion cubic feet withdrawal, and saw their natural gas supplies fall to 29.6% below normal for the 2nd weekend in February....

February 16 2019 temperature departure from normal for week ending February 7

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending February 8th, indicated a large drop in our refinery throughput, a corresponding large drop in our oil imports, a modest drop in our oil exports, and a modest addition of surplus oil to our commercial supplies of crude oil ...our imports of crude oil fell by an average of 936,000 barrels per day to an average of 6,210,000 barrels per day, ​a 22 year low, ​after rising by an average of 63,000 barrels per day the prior week, while our exports of crude oil fell by an average of 506,000 barrels per day to an average of 2,364,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,846,000 barrels of per day during the week ending February 8th, 430,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was estimated to be unchanged at a record 11,900,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 15,746,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 15,768,000 barrels of crude per day during the week ending February 8th, 865,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period 519,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....thus, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 541,000 fewer barrels per day than the oil that was added to storage plus what refineries reported they used during the week....to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+541,000) 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 is labeled in their footnotes as "unaccounted for crude oil"....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

since our oil imports have now dropped to the lowest level since the first week of 1997, we'll include a graph of that ​oil ​import history below...note, however, that there were extenuating circumstances ​impacting​ this week's imports; first, the embargo of oil imports from Venezuela reduced deliveries to the Gulf Coast a​s​ ​oil tankers in transit remained offshore, and secondly, the shutting down of the Keystone pipeline due to a leak near St. Louis stopped its oil deliveries from Canada...both of those ​supply ​interruptions also impacted the availability of heavy sour crude to those US oil refineries that are optimized for it...

February 13 2019 oil imports as of February 8th

further details from the weekly Petroleum Status Report (pdf) indicate​d​ that the 4 week average of our oil imports fell to an average of 7,158,000 barrels per day last week, now 11.2% less than the 8,063,000 barrel per day average that we were importing over the same four-week period last year.... the 519,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported unchanged at 11,900,000 barrels per day because the rounded estimate for output from wells in the lower 48 states was unchanged at 11,400,000 barrels per day, and because Alaska's production was also unchanged at 498,000 barrels per day, ie not enough to change the rounded national total...last year's US crude oil production for the week ending February 9th was at 10,271,000 barrels per day, so this week's rounded oil production figure was 15.9% above that of a year ago, and 41.2% 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 85.9% of their capacity in using 15,768,000 barrels of crude per day during the week ending February 8th, down from the prior week's 90.7% of capacity, and the lowest capacity utilization rate in 16 months....the 15,768,000 barrels per day of oil that were refined this week was also the lowest in 16 months, 2.4% below the 16,162,000 barrels of crude per day that were being processed during the week ending February 9th, 2018, when US refineries were operating at 89.8% of capacity... 

with the big drop in the amount of oil being refined, the gasoline output from our refineries was also lower, falling by 237,000 barrels per day to 9,619,000 barrels per day during the week ending February 8th, after our refineries' gasoline output had decreased by 48,000 barrels per day the prior week....but even with the decrease in this week's gasoline output, our gasoline production was still a bit higher than the 9,592,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 537,000 barrels per day to 4,764,000 barrels per day, after that output had increased by 102,000 barrels per day the prior week....with that decrease, this week's distillates production was almost 1.0% below the 4,811,000 barrels of distillates per day that were being produced during the week ending February 9th, 2018.... 

even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week rose by 408,000 barrels to 258,301,000 barrels by February 8th, after rising by 513,000 barrels over the prior week....our gasoline supplies rose this week mostly because the amount of gasoline supplied to US markets fell by 425,000 barrels per day to 8,648,000 barrels per day, after decreasing by 491,000 barrels per day the prior week, while our imports of gasoline fell by 168,000 barrels per day to 457,000 barrels and as our exports of gasoline rose by 64,000 barrels per day to 959,000 barrels per day....having set a record high three weeks ago, our gasoline inventories are still at a seasonal high for the second weekend of February, 3.7% higher than last February 9th's level of 249,073,000 barrels, and roughly 4% above the five year average of our gasoline supplies ​at this time of the year...

even with the increase in our distillates production, our supplies of distillate fuels still managed to increase for the 7th time in twenty-one weeks, rising by 1,087,000 barrels to 140,200,000 barrels during the week ending February 8th, after our distillates supplies had decreased by 2,257,000 barrels over the prior week...our distillates supplies increased this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 906,000 barrels per day to 3,767,000 barrels per day, not surprising considering the reduced demand for heat oil, while our exports of distillates rose by 36,000 barrels per day to 1,265,000 barrels per day, and while our imports of distillates fell by 21,000 barrels per day to 438,000 barrels per day...but even with this week's increase, our distillate supplies are still 0.8% below the 141,367,000 barrels that we had stored on February 9th, 2018, and remain roughly 2% below the five year average of distillates stocks for this time of the year...

finally, with the cutback in refining and falling exports​ more than offsetting falling imports​, our commercial supplies of crude oil in storage increased for the 5th time in the past 11  weeks, rising by 3,633,000 barrels over the week, from 447,207,000 barrels on February 1st to 450,840,000 barrels on February 8th ...with weekly increases now in 15 out of the last 21 weeks, our crude oil inventories are roughly 6% above the five-year average of crude oil supplies for this time of year, and nearly 30% above the 10 year average of crude oil stocks for the second weekend of February, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have mostly been rising since this past Fall, after ​generally ​falling until then through most of the previous year and a half, our oil supplies as of February 8th were thus 6.8% above the 422,095,000 barrels of oil we had stored on February 9th of 2018, while still remaining 13.0% below the 518,119,000 barrels of oil that we had in storage on February 10th of 2017, and 4.6% below the 472,823,000 barrels of oil we had in storage on February 12th of 2016...    

OPEC's Monthly Oil Market Report

with the news of OPEC's production cuts moving the oil markets​ this week​, we're next going to review OPEC's February Oil Market Report (covering January OPEC & global oil data), which was released on Tuesday of this past week, and which is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 57 of that report (pdf page 67), 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 thus resolve any potential disputes that could arise if each member reported their own figures...

January 2019 OPEC crude output via secondary sources

as we can see on this table of official oil production data, OPEC's oil output dropped by 797,000 barrels per day to 30,806,000 barrels per day in January, from their revised December production total of 31,603,000 barrels per day...however that December figure was originally reported as 31,578,000 barrels per day, so their production for January was effectively a 772,000 barrel per day decrease from the previously reported figures (for your reference, here is the table of the official December OPEC output figures as reported a month ago, before this month's revisions)...

as we can tell from the far right column on the table above, most of the OPEC member​s​ contributed output cutbacks to this month's production reduction, led by a the 350,000 barrel per day drop in the oil output from Saudi Arabia, the 146,000 barrel per day drop in the oil output from the United Arab Emirates, and the 90,000 barrels per day drop in the oil output from Kuwait....except for Iraq and Nigeria, the oil output from OPEC members as shown above is already pretty close to the output allocations assigned to each member after their December 7th meeting, when they 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...this can be seen in the table of OPEC production allocations we've included below:

February 6 2019 Platts on OPEC allocations

the above table came from a February 6th post on Saudi cuts and OPEC allocations at S&P Global Platts, which has more details: the column of numbers shows average daily production quota in millions of barrels of oil per day for each of the OPEC members for the first 6 months of this year, as was agreed to at their December 2018 meeting...note that Venezuela and Iran, who's oil exports are being sanctioned by the Trump administration, and Libya, which has been beset by disruptive civil strife, are exempt from any production quotas, yet their output also continues to fall...

the next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from February 2017 to January 2019, and it comes from page 58 (pdf page 68) of the February 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...    

January 2019 OPEC report global oil supply

OPEC's preliminary estimate indicates that total global oil production fell by 1.03 million barrels per day to 99.32 million barrels per day in January, after December's total global output figure was revised up by 330,000 barrels per day from the 100.02 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production fell by a rounded 230,000 barrels per day in January after that revision, with decreased oil output from Canada, the former Soviet Union, and China the major reasons for the non-OPEC production​ ​decrease....OPEC also reported that global oil output during January was 1.73 million barrels per day below global oil output in January a year ago, but the February 2018 OPEC report online (pdf) indicated January 2018 global output was at 97.66 million barrels per day, so we have to assume that they should have reported that global oil production in January was 1.73 million barrels per day greater than the revised global output in January a year ago...after the big January decrease in OPEC's output, their January oil production of 30,806,000 barrels per day represented just 31.0% of what was produced globally during the month, down from the 31.6% share they reported for December....OPEC's January 2018 production was reported at 32,302,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding Qatar from last year's total and new member Congo from this year's, are now producing 1,210,000 fewer barrels per day of oil than they were producing a year ago, with a 496,000 barrel per day decrease in output from Venezuela and a 1,075,000 barrel per day decrease in output from Iran from that time more than offsetting the production increases of 236,000 barrels per day from the Saudis, 214,000 barrels per day from the Emirates, and 234,000 barrels per day from Iraq...   

however, despite the 1.03 million barrels per day decrease in global oil output we've seen during January, we still had a modest surplus in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us... 

January 2019 OPEC report global oil demand

the table above comes from page 31 of the February OPEC Monthly Oil Market Report (pdf page 41), 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 second column, we've circled in blue the figure that's relevant for January, which is their revised estimate of global oil demand during the first quarter of 2018...       

OPEC's estimate is that during the 1st quarter of this year, all oil consuming regions of the globe will be using 99.02 million barrels of oil per day, which was revised from their estimate of a month ago that we'd be using 99.10 million barrels of oil per day....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were still producing 99.32 million barrels per day during January, which means that there was a surplus of around 300,000 barrels per day in global oil production as compared to the demand now estimated for the month...    

we should also note that ​the ​previous estimate for 2018's oil demand was revised 30,000 barrels per day lower with this report, a figure which we've highlighted in green...that revision wasn't consistent over the whole year, however, as the 2018 demand table on page 30 of the February OPEC Monthly Oil Market Report (pdf page 40) shows demand for the 3rd and 4th quarters revised 50,000 barrels per day lower, while ​2018's ​1st and 2nd quarter oil demand was unrevised from previously published figures...we're not going to review all of 2018's monthly surplus and deficit figures anymore now, but we should note that December's global output total was revised up by 330,000 barrels per day at the same time as demand was revised 50,000 barrels per day lower, which means that December's global oil surplus would now figure to have been 420,000 barrels per day, rather than the 40,000 barrels per day indicated by last month's report...that, and the other demand revisions mean that for all of 2018, global oil demand exceeded production by roughly 38,370,000 barrels, a comparatively tiny net oil shortfall that would be the equivalent of roughly 9 hours and ​10 minutes of global oil production at the revised December production rate...

This Week's Rig Count

drilling activity in the US saw another small increase this week, but it still remains below the levels of this past Fall, when both oil and natural gas prices were considerably higher....Baker Hughes reported that the total count of rotary rigs running in the US rose by 2 rigs to 1051 rigs over the week ending February 15th, which was also 76 more rigs than the 975 rigs that were in use as of the February 16th report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil rose by 3 rigs to 857 rigs this week, which was also 59 more oil rigs than were running a year ago, while it was 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 one rig to 194 natural gas rigs, which was still 17 more rigs than the 177 natural gas rigs that were drilling a year ago, but way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

offshore platforms drilling in the Gulf of Mexico increased by 2 to 21 this week, with the addition of one rig offshore from Texas and one rig offshore from Louisiana...that meant there were 3 more Gulf rigs running than were drilling a year earlier, when 17 rigs were deployed offshore from Louisiana and a rig was also active offshore from Texas...since there is still no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2018, this week's Gulf of Mexico totals are again identical to the overall US offshore totals...

in addition, another drilling platform also started up on an inland body of water in Louisiana this week, where their are now two such "inland waters" rigs drilling, up from one inland waters rig a year ago..

the count of active horizontal drilling rigs decreased by 8 rigs to 915 horizontal rigs this week, which was still 76 more horizontal rigs active than the 839 horizontal rigs that were in use in the US on February 16th of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the vertical rig count decreased by 2 rigs to 66 vertical rigs this week, which was still up by one from the 65 vertical rigs that were in use during the same week of last year...on the other hand, the directional rig count increased by 12 rigs to 70 directional rigs this week, which was still down from the 71 directional rigs that were operating on February 16th of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of February 15th, the second column shows the change in the number of working rigs between last week's count (February 8th) and this week's (February 15th) count, the third column shows last week's February 8th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 16th of February, 2018...     

February 15 2019 rig count summary

the negative basin counts we see above just about account for this week's 8 rig drop in horizontal rigs, and a net of one more horizontal ​rig ​was pulled from basins not tracked separately by Baker Hughes...the 5 rig d​rop in the Permian basin included three rigs pulled from Texas Oil District 7C, or the southern Permian Midland, and two rigs pulled out of the Permian Delaware in New Mexico; activity in Texas Oil District 8, or the core Permian Delaware, remained unchanged, with 314 rigs still drilling there...in rigs drilling for natural gas, two horizontal rigs were added in the Haynesville of northern Louisiana, while one horizontal rig was added in West Virginia's Marcellus; at the same time, three horizontal rigs were pulled out of the Marcellus in Pennsylvania, and one rig of the 5 horizontal gas rigs drilling in the Arkoma Woodford of Oklahoma was switched​ from targeting natural gas​ to target oil....note that other than in the major producing states shown above, drillers in Alabama also started up a rig this week, after 2 weeks of no drilling in th​at state; a year ago, Alabama had one rig active, and has generally seen one or two rigs running most weeks over the past three years...

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NOTE: there's more here...

Sunday, February 10, 2019

not out of the woods on natural gas stores; EIA will report record oil production in excess of 12 million bpd next week

oil prices gave up last week's gains and then some this week, while still remaining in the same narrow range they've been in over the past month...after rising nearly 3% to $55.26 a barrel on the new sanctions on Venezuelan oil exports last week, prices for US oil for March delivery fell 70 cents to $54.56 a barrel on Monday, after unexpected weakness in U.S. factory data raised concerns that an economic slowdown would reduce demand for oil...oil prices then fell another 90 cents to $53.66 on Tuesday, after a survey showing that euro zone business expansion had nearly stalled in January heightened concerns about a global economic slowdown....however, oil prices reversed early losses on Wednesday, after the weekly EIA data showed a drop in product inventories and a smaller rise in U.S. crude stockpiles than the Tuesday API report suggested, and went on to close up 35 cents for the day at $54.01 a barrel...selling returned on Thursday, with March crude prices tumbling 2.5% to $52.64 a barrel, amid indications that the trade war between the U.S. and China would continue....oil prices managed to gain 8 cents against a strong dollar to close at $52.72 a barrel in quiet trading on Friday, but still ended the week 4.6% lower--the largest weekly percentage loss for a front-month contract since the week ended Dec. 21...

meanwhile, natural gas prices continued lower after falling to a 28 week low last week, as the March contract ended this week down 15.1 cents at $2.583 per mmBTU, the lowest closing price since last March, despite an EIA gas storage report that showed the largest draw this season...the natural gas storage report for the week ending February 1st from the EIA indicated that the quantity of natural gas held in storage in the US fell by 237 billion cubic feet to 1,960 billion cubic feet over the week, which meant our gas supplies were 135 billion cubic feet, or 6.4% below the 2,095 billion cubic feet that were in storage on February 2nd of last year, and 414 billion cubic feet, or 17.5% below the five-year average of 2,375 billion cubic feet of natural gas that have typically been in storage as of the 1st weekend in February....this week's 237 billion cubic feet withdrawal from US natural gas supplies was somewhat less than the S&P Global Platts' survey of analysts expectations that 249 billion cubic feet of stored gas would be needed, but it was quite a bit more the average of 150 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same winter week over the last 5 years...

with the polar vortex pushing temperatures more than 20 degrees below normal, 84 billion cubic feet of natural gas were needed from storage in the Midwest during the week, well above the normal 51 billion cubic foot pull for the region, and as a result the region's natural gas supply deficit increased to 14.7% below normal for this time of year, while at the same time natural gas supplies in the South Central region fell by 79 billion cubic feet, as their supply deficit increased to 12.2% below the normal for the first weekend of February...the Eastern states also saw an above normal withdrawal of 59 billion cubic feet of gas, as their natural gas deficit increased to 11.7% below their 5 year average of gas stores at the beginning of February....9 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region, which normally pulls out 7 billion cubic feet for the same week, as their deficit from normal rose to 26.1%, but since temperatures in the Pacific states stayed above normal during the polar vortex, they only needed 6 billion cubic feet of gas from storage for the week, and their deficit from normal fell to 25.9% below their five year average for this time of year as a result...

while the EIA reports that "total working gas is within the five-year historical range", that's because the 5 year reference period includes 2014, which saw multiple outbreaks of the polar vortex, with a withdrawal of 990 billion cubic feet over 4 weeks in February that helped drive that year's natural gas supplies to the lowest on record by the end of March...we certainly don't expect to approach that kind of cold anymore this year, but the temperatures after January of last year were not exceptional, and yet we still approached the current heating season with our natural gas supplies at the lowest level in 15 years...since our natural gas supplies are 6.4% below those of a year ago as of this week, it will take smaller withdrawals through the remainder of this winter and/or larger inventory building this spring and fall to avoid entering the winter of 2020 in the same or worse shape than we entered this one...that fact isn't lost on natural gas traders, who are still pricing natural gas for January 2020 delivery more than 15% higher than the price of the front month contract for natural gas today...

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending February 1st, indicated that we again managed a modest addition of surplus oil to our commercial crude supplies, despite a big jump in our crude oil exports, largely because of a large swing from unaccounted for crude demand to unaccounted for crude supply...our imports of crude oil rose by an average of 63,000 barrels per day to an average of 7,146,000 barrels per day, after falling by an average of 1,108,000 barrels per day the prior week, while our exports of crude oil rose by an average of 926,000 barrels per day to an average of 2,870,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,276,000 barrels of per day during the week ending February 1st, 863,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was estimated to be unchanged at a record 11,900,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,176,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 16,633,000 barrels of crude per day during the week ending February 1st, 170,000 more barrels per day than the amount of oil they used during the prior week, while over the same period 180,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....thus, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 637,000 fewer barrels per day than the oil that was added to storage plus what refineries reported they used during the week....to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+637,000) 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 is labeled in their footnotes as "unaccounted for crude oil"...since that "unaccounted for crude" figure was at minus 445,000 barrels per day the prior week, it represents a swing of 1,082,000 barrels per day in that error margin, enough to consider th​is week's week over week changes very unreliable....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 7,487,000 barrels per day last week, which was 7.3% less than the 8,078,000 barrel per day average that we were importing over the same four-week period last year.... the 180,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported unchanged at 11,900,000 barrels per day because the rounded estimate for output from wells in the lower 48 states was unchanged at 11,400,000 barrels per day, while a 9,000 barrel per day increase to 498,000 barrels per day in oil output from Alaska was not enough to change the rounded national total...last year's US crude oil production for the week ending February 2nd was at 10,251,000 barrels per day, so this week's rounded oil production figure was 16.1% above that of a year ago, and 41.2% 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...     

as we've often mentioned, these weekly oil production figures we report are preliminary, and the EIA also releases confirmed monthly oil production figures a few months later, after they have collected all the precise production reports that aren't available on a weekly basis....that monthly report ​for ​November was released this week, and since the monthly data shows a production jump that's not yet reflected in the weekly figures, we'll include a graphic showing both, so we can see what that ​difference ​looks like... 

February 9 2019 confirmed crude production

the above graph was taken from this week's OilPrice Intelligence Report, and it shows the history of confirmed oil production data monthly from January 2016 to November 2018 in blue, and then the weekly estimates of US oil production up until the current week in yellow after that period, with both metrics in thousands of barrels per day (note the yellow arrow is a bit off)....above the graph, OilPrice also gives us the rounded weekly estimates of oil production in thousands of barrels per day for the weeks ending December 28th through February 1st, as was reported by the EIA....we follow that weekly data because it's what the oil traders follow, and hence it moves oil prices and ultimately the decisions on the part of exploitation companies to start drilling for oil...however, the confirmed oil production figures for November were released this week and showed our crude production at a higher than expected 11,900,000 barrels per day average during that month, up from the confirmed 11,555,000 barrels per day in October...the weekly production estimates for November, on the other hand, had ranged from 11,600,000 barrels per day to 11,700,000 barrels per day, and thus averaged 220,000 barrels per day lower than the confirmed figures....when the confirmed oil production figure comes in that much higher than the weekly estimates, the EIA will subsequently adjust their weekly estimate to reflect the new confirmed production totals...hence, it's reasonable to assume that EIA's production estimate for next week will be at least at 12,100,000 barrels per day, and most likely higher, hence topping 12 million barrels per day for the first time in history...

meanwhile, US oil refineries were operating at 90.7% of their capacity in using 16,633,000 barrels of crude per day during the week ending February 1st, up from the prior week's 90.1% of capacity, and a fairly high capacity utilization rate for this time of year....however, the 16,633,000 barrels per day of oil that were refined this week were 1.0% below the 16,797,000 barrels of crude per day that were being processed during the week ending February 2nd, 2018, when US refineries were operating at an even higher 92.5% of capacity... 

even with the modest increase in the amount of oil being refined, the gasoline output from our refineries was a bit lower, falling by 48,000 barrels per day to 9,856,000 barrels per day during the week ending February 1st, after our refineries' gasoline output had increased by 300,000 barrels per day the prior week....with the decrease in this week's gasoline output, our gasoline production was 2.3% lower than the 10,085,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 102,000 barrels per day to 5,121,000 barrels per day, after that output had decreased by 185,000 barrels per day the prior week....with that increase, this week's distillates production was little changed from the 5,129,000 barrels of distillates per day that were being produced during the week ending February 2nd, 2018.... 

even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week rose by 513,000 barrels to 257,893,000 barrels by February 1st, after falling by 2,235,000 barrels over the prior week....our gasoline supplies rose this week mostly because the amount of gasoline supplied to US markets fell by 491,000 barrels per day to 9,073,000 barrels per day, after increasing by 999,000 barrels per day over the prior two weeks, and because our imports of gasoline rose by 102,000 barrels per day to 625,000 barrels while our exports of gasoline rose by 288,000 barrels per day to 895,000 barrels per day....having set a record high two weeks ago, our gasoline inventories are still at a seasonal high for the first weekend of February, 5.1% higher than last February 2nd's level of 245,474,000 barrels, and 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 14th time in twenty weeks, falling by 2,257,000 barrels to 139,013,000 barrels during the week ending February 1st, after our distillates supplies had decreased by 1,122,000 barrels over the prior week...our distillates supplies decreased this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, jumped by 551,000 barrels per day to 4,673,000 barrels per day, not surprising given the heating needs for the week, while our exports of distillates rose by 37,000 barrels per day to 1,229,000 barrels per day and our imports of distillates rose by 324,000 barrels per day to 459,000 barrels per day...with this week's decrease, our distillate supplies are now 2.0% below the 141,826,000 barrels that we had stored on February 2nd, 2018, and fell to roughly 4% below the five year average of distillates stocks for this time of the year...

finally, with the caveat that the source of much of this week's crude supply was unaccounted for, our commercial supplies of crude oil in storage increased for the 4th time in the past 10 weeks, rising by 1,263,000 barrels over the week, from 445,944,000 barrels on January 25th to 447,207,000 barrels on February 1st...with weekly increases now in 14 out of the last 20 weeks, our crude oil inventories are roughly 6% above the five-year average of crude oil supplies for this time of year, and ​nearly 30% above the 10 year average of crude oil stocks for the first weekend of February, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories had mostly been rising since this past Fall, after falling until then through most of the prior year and a half, our oil supplies as of February 1st were thus 6.4% above the 420,254,000 barrels of oil we had stored on February 2nd of 2018, while still remaining 12.1% below the 508,592,000 barrels of oil that we had in storage on February 3rd of 2017, and 5.0% below the 470,676,000 barrels of oil we had in storage on February 5th of 2016...     

This Week's Rig Count

US drilling activity, as evidenced by the number of drilling rigs active at the end of the week, increased for the second time in 6 weeks this past week, but still remains well below the levels of October and November, when both oil and natural gas prices were considerably higher....Baker Hughes reported that the total count of rotary rigs running in the US rose by 4 rigs to 1049 rigs over the week ending February 8th, which was also 74 more rigs than the 975 rigs that were in use as of the February 9th report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil rose by 7 rigs to 854 rigs this week, which was also 63 more oil rigs than were running a year ago, while it was 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 3 rigs to 195 natural gas rigs, which was still 11 more rigs than the 184 natural gas rigs that were drilling a year ago, but way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

offshore drilling activity was unchanged, with 19 rigs still deployed in the Gulf of Mexico this week, with all of those offshore from Louisiana...that was still 3 more Gulf rigs than were drilling a year earlier, when 15 rigs were deployed offshore from Louisiana and a rig was also active offshore from Texas....since there is still no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2018, this week's Gulf of Mexico totals are again identical to the overall US offshore totals...

the count of active horizontal drilling rigs decreased by 2 rigs to 923 horizontal rigs this week, which was still 91 more horizontal rigs active than the 832 horizontal rigs that were in use in the US on February 9th of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....on the other hand, the vertical rig count increased by 5 rigs to 68 vertical rigs this week, which was still down from the 70 vertical rigs that were in use during the same week of last year...meanwhile, the directional rig count increased by 1 rig to 58 directional rigs this week, which was also down from the 73 directional rigs that were operating on February 9th of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of February 8th, the second column shows the change in the number of working rigs between last week's count (February 1st) and this week's (February 8th) count, the third column shows last week's February 1st active rig count, the 4th column shows the change between the number of rigs running on Friday and those running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 2nd of February, 2018...    

February 8 2019 rig count summary

as you can see, this week's rig increases were primary in Alaska and California, both major producing states, but neither of which have been in the vanguard of new drilling activity in recent years...we didn't see any news on where new drilling might be taking place in Alaska, but considering the time of year, it's unlikely it was anywhere on the North Slope or in the Arctic National Wildlife Refuge, where the administration is barreling ahead with plans to drill for oil...even with those Alaska and California increases, however, the state totals shown above don't add up to the 4 rig increase we reported, because Mississippi drillers also added a rig this week and now have 4 rigs running, up from 3 rigs a year ago...while the major basin count does reflect the decrease of 2 horizontal rigs, that doesn't mean there weren't changes elsewhere, just that the additions and subtractions in those 'other' basins netted out to zero...that's obvious from the natural gas rig count changes, which showed one natural gas rig added in the Dallas / Ft Worth area Barnett shale, where an oil rig was concurrently pulled out, one natural gas rig pulled out of the south Texas Eagle Ford, which saw two oil rigs added at the same time, and 3 natural gas rigs pulled out of basins not tracked separately by Baker Hughes...meanwhile, it looks like the three rig decrease in the Permian was spread out across the basin, with one rig pulled from Texas Oil District 8, which would be the core Permian Delaware, one rig pulled from Texas Oil District 7C, which would be the southern Permian Midland, and one Permian rig pulled out of ​the ​Permian Delaware​ in ​New Mexico...

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note: there's more here....

Sunday, February 3, 2019

natural gas prices at a 28 week low, active oil rigs at a 37 week low...

oil prices finished the week higher for the 4th time in 5 weeks, mostly on new US sanctions on Venezuelan oil exports, which were also accompanied by associated distortions in refinery product pricing and even greater spikes in grades of oil seen as replacements for Venezuelan crude​...after falling 0.7% to $53.69 per barrel on concerns over a global economic slowdown last week, prices for US oil for March delivery fell $1.70, or 3.2%, to $51.99 on Monday, as weak industrial earnings reports from both China and the United States renewed fears of a global ​downturn that would dampen fuel demand...oil prices steadied at the start of trading on Tuesday, and then jumped more than 2 percent later, after the United States imposed sanctions on state-owned Venezuelan oil company PDVSA, with March oil finishing up $1.32 at $53.31 a barrel...as Gulf Coast refiners scrambled to find more costly replacement barrels for the cheap heavy sour Venezuelan crude they were ​optimized for, US oil prices rose another 92 cents to $54.23 a barrel Wednesday, after the weekly EIA report showed a smaller than expected increase in U.S. crude inventories and an unexpected drop in gasoline supplies...after oil prices rose to two-month high of $55.37 a barrel on Thursday morning, economic concerns​ again​ overtook the rally that afternoon, when Trump’s suggestion that a trade deal with China could be postponed triggered a move nearly 3% lower, with oil ending the day down 44 cents to $53.79 a barrel, but still finish​ing the month of January 18% higher, the largest gain for that month on record...oil prices then jumped with the stock market on Friday morning after the Labor Department reported a larger than expected surge in US employment and continued rallying throughout the day, first on signs that U.S. sanctions on Venezuelan exports had tightened supply and then after weekly data showed U.S. drillers cut back on the number of oil rigs they were running, with oil finishing $1.47 higher at $55.26 a barrel...​thus US crude prices for March ended the week nearly 3% higher, while Brent crude for April, the currently traded international oil benchmark, finished at $62.75​ a barrel, ​a gain of $1.16 or 1.8% from the prior week's close...

natural gas prices, meanwhile, were down 4 out of 5 days in falling to a six month low, despite the coldest weather outbreak in years, as gas traders looked ahead to forecasts of a quick weekend warm-up and the likelihood that we'd finish the heating season without a supply crisis...after ending last week down 8.7% at $3.178 per mmBTU, prices for natural gas for February delivery fell another 8% or 26.7 cents on Monday alone, on a pronounced drop in the Gas Weighted Degree Day forecasts for the beginning of February...that February gas contract rebounded 3.9 cents on ​renewed ​cold mid-February risks to expire at $2.950 per mmBTU, while contracts for March natural gas delivery, which had ended last week priced at $3.072 per mmBTU, rose 3.0 cents to 2.903 per mmBTU, after ​having dropped 19.9 cents on Monday...prices for March gas then fell daily from there, first by 4.9 cents on Wednesday, then by 4 cents on Thursday, and by 8 cents on Friday​,​ to end the week at $2.734 per mmBTU, the lowest close since July 23rd of 2018...

with natural gas prices now back at a 6 month low, we'll include a graph of the recent price trajectory, to show you all what the ​latest ​​move has looked like..

February 2 2019 daily natural gas prices

the above graph is a Saturday afternoon screenshot of the interactive US natural gas price graph at Daily FX, an online platform that provides trading news, charts, indicators and analysis of the markets...each bar on the above graph represents natural gas prices for a day of trading between mid July of 2018 and Friday of this week, wherein the green bars represent the days when the price of natural gas went up, and red bars represent the days when the price of natural gas went down...for green bars, the starting natural gas price at the beginning of the day is at the bottom of the bar and the price at the end of the day is at the top of the bar, while for red or down days, the starting price is at the top of the bar and the price at the end of the day is at the bottom of the bar...barely visible on this "candlestick" style graph are the faint grey "wicks" above and below each bar, to indicate trading prices during the day that were above or below the opening to closing price range for that day...note that the lighter red & green bars at the bottom of the graph represent the trading volume for each day, which doesn't concern us ​right now, except to note the poor graph design that has natural gas price​ bar​s crossing into the trading volume metrics...

we can see that before October, natural gas prices had stayed below $3 per mmBTU (really all year), and it was only when the possibility of a wintertime natural gas shortage became widely talked about that prices began to move higher...then prices shot up to nearly $5 when November turned cold, and withdrawals of gas from storage were much above normal...then, with the milder temperatures and smaller withdrawals from storage during December and January, natural gas traders figured that the crisis had passed, and hence natural gas prices have since fallen back to below their previous baseline...ultimately, if prices ​should ​hold at these levels, this ​would be accompanied by reduced drilling, setting us up for the same go-round next year...

the natural gas storage report for the week ending January 25th from the EIA indicated that the quantity of natural gas in storage in the US fell by 173 billion cubic feet to 2,197 billion cubic feet over the week, which meant our gas supplies were 14 billion cubic feet, or 0.6% above the 2,211 billion cubic feet that were in storage on January 26th of last year, but still 328 billion cubic feet, or 13.0% below the five-year average of 2,525 billion cubic feet of natural gas that have typically been in storage as of the 4th weekend in January....this week's 173 billion cubic feet withdrawal from US natural gas supplies was a bit less than the consensus estimate that 183 billion cubic feet ​of stored gas ​would be needed, but it was somewhat more the average of 150 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same week of January over the last 5 years....67 billion cubic feet was pulled from natural gas supplies in the Midwest ​during the week, and hence the region's natural gas deficit increased to 8.6% below normal for this time of year, while withdrawals from other regions was about on par with normal...natural gas supplies in the Pacific region, which were only down 7 billion cubic feet this week, still remain 26.4% below their five year average for this time of year, the worst deficit of any region...

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending January 25th, indicated that due to a significant pullback in US oil refining, we still managed a small addition of surplus oil to our commercial crude supplies, despite a big drop in our crude oil imports...our imports of crude oil fell by an average of 1,108,000 barrels per day to an average of 7,083,000 barrels per day, after rising by an average of 644,000 barrels per day the prior week, while our exports of crude oil fell by an average of 91,000 barrels per day to an average of 1,944,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,139,000 barrels of per day during the week ending January 25th, 1,017,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was estimated to be unchanged at a record 11,900,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 17,039,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 16,463,000 barrels of crude per day during the week ending January 25th, 586,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period 131,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....thus, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 445,000 more barrels per day than the oil that was added to storage plus what refineries reported they used during the week....to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (-445,000) 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 is labeled in their footnotes as "unaccounted for crude oil"....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 7,662,000 barrels per day last week, which was 4.5% less than the 8,020,000 barrel per day average that we were importing over the same four-week period last year.... the 131,000 barrel per day increase in our total crude inventories was entirely a 131,000 barrel per day addition to our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported unchanged at 11,900,000 barrels per day because the rounded estimate for output from wells in the lower 48 states was unchanged at 11,400,000 barrels per day, while a 2,000 barrel per day decrease to 489,000 barrels per day in oil output from Alaska was not enough to change the rounded national total...last year's US crude oil production for the week ending January 26th was at 9,919,000 barrels per day, so this week's rounded oil production figure was 20.0% above that of a year ago, and 41.2% 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...     

US oil refineries were operating at 90.1% of their capacity in using those 16,463,000 barrels of crude per day during the week ending January 25th, down from last week's 92.9% of capacity, but remarkably still the highest refinery capacity utilization rate for the last weekend of January since 1999....likewise, the 16,463,000 barrels per day of oil that were refined this week were again at a seasonal high for the date for the 31st time out of the past 35 weeks, and 2.8% higher than the 16,013,000 barrels of crude per day that were being processed during the week ending January 26th, 2017, when US refineries were operating at 88.1% of capacity... 

even with the big drop in the amount of oil being refined, the gasoline output from our refineries was a quite a bit higher, rising by 300,000 barrels per day to 9,904,000 barrels per day during the week ending January 25th, after our refineries' gasoline output had increased by 20,000 barrels per day the prior week....with the big increase in this week's gasoline output, our gasoline production was 3.5% higher than the 9,567,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 185,000 barrels per day to 5,019,000 barrels per day, after that output had decreased by 208,000 barrels per day the prior week....however, despite those decreases, this week's distillates production was still 8.8% higher than the the 4,613,000 barrels of distillates per day that were being produced during the week ending January 26th, 2018.... 

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell by 2,235,000 barrels from last week's record high to 257,380,000 barrels by January 25th, after jumping by a near record of 19,619,000 barrels over the prior three weeks....our gasoline supplies fell this week largely because the amount of gasoline supplied to US markets rose by 696,000 barrels per day to 9,564,000 barrels per day, after increasing by 303,000 barrels per day the prior week, while our imports of gasoline fell by 38,000 barrels per day to 523,000 barrels and as our exports of gasoline rose by 60,000 barrels per day to 607,000 barrels per day....despite this week's decrease, our gasoline inventories are still at a seasonal high for the last weekend of January, 6.2% higher than last January 26th's level of 242,060,000 barrels, and roughly 5% above the five year average of our gasoline supplies for this time of the year...

with the decrease in our distillates production, our supplies of distillate fuels decreased for the 13th time in nineteen weeks, falling by 1,122,000 barrels to 141,270,000 barrels during the week ending January 25th, after our distillates supplies had decreased by 617,000 barrels over the prior week...our distillates supplies decreased this week because our exports of distillates rose by 213,000 barrels per day to 1,192,000 barrels per day while our imports of distillates fell by 220,000 barrels per day to 135,000 barrels per day, even as the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 546,000 barrels per day to 4,122,000 barrels per day...even with this week's decrease, our distillate supplies were still 2.4% above the 137,900,000 barrels that we had stored on January 26th, 2017, even as they remained roughly 2% below the five year average of distillates stocks for this time of the year...

finally, with refineries seasonally slowing, our commercial supplies of crude oil increased for the 3rd time in​ the past​ 9 weeks, rising by 919,000 barrels over the week, from 445,025,000 barrels on January 18th to 445,944,000 barrels on January 25th...however, with a run of 10 large weekly increases before the recent smaller decreases, our crude oil inventories are still roughly 7% above the five-year average of crude oil supplies for this time of year, and more than 30% above the 10 year average of crude oil stocks for the last weekend  of January, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories had mostly been rising since this past Fall, after falling until then through most of the prior year and a half, our oil supplies as of January 25th were thus 6.6% above the 418,359,000 barrels of oil we had stored on January 26th of 2018, while  still remaining 9.8% below the 494,762,000 barrels of oil that we had in storage on January 27th of 2017, and 5.4% below the 471,344,000 barrels of oil we had in storage on January 29th of 2016...    

This Week's Rig Count

US drilling activity, as evidenced by the number of drilling rigs active at the end of the week, fell by double digits for the second time in 3 weeks this past week, and is now at it's lowest level since August​, ​probably due to the depressed oil prices ​in recent months​,​ and ​due to ​the ​7.1 month backlog of uncompleted wells....Baker Hughes reported that the total count of rotary rigs running in the US fell by 14 rigs to 1045 rigs over the week ending February 1st, which was still 99 more rigs than the 946 rigs that were in use as of the February 2nd report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, which was the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil fell by 15 rigs to 847 rigs this week, which was the lowest oil rig count since May 18th, but still 82 more oil rigs​ ​than were running a year ago, while it was 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 increased by 1 rig to 198 natural gas rigs, which was also 17 more rigs than the 181 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

drilling in the Gulf of Mexico decreased by 1 rig to 19 rigs this week, with all of those​ remaning​ deployed offshore from Louisiana...that was still 3 more Gulf rigs than were drilling a year earlier, when 15 rigs were deployed offshore from Louisiana and a rig was also active offshore from Texas....since there is still no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2018, this week's Gulf of Mexico totals are again identical to the overall US offshore totals...

the count of active horizontal drilling rigs decreased by 7 rigs to 925 horizontal rigs this week, which was still 117 more horizontal rigs active than the 808 horizontal rigs that were in use in the US on February 2nd of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....at the same time, the directional rig count decreased by 2 rigs to 57 directional rigs this week, which was also down from the 72 directional rigs that were in use during the same week of last year...in addition, the vertical rig count decreased by 5 rigs to 63 vertical rigs this week, which was also down from the 66 vertical rigs that were operating on February 2nd of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of February 1st, the second column shows the change in the number of working rigs between last week's count (January 25th) and this week's (February 1st) count, the third column shows last week's January 25th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 2nd of February, 2018...    

February 1 2019 rig count summary

the 4 rig increase in the Mississippian shale, which for the purpose of this drilling report, straddles the Kansas - Oklahoma border, is problematic, considering the 1 rig decrease in Kansas and the 4 rig decrease in Oklahoma; however, since Kansas is left with no activity, it's evident that those Mississippian rigs were added in Oklahoma, displacing rigs in other Oklahoma basins, not all of which ​appear to be named above...for starters, since activity in Texas Oil District 10 (the panhandle​ area​) was unchanged, that means the 3 Granite Wash rigs that were shut down were pulled out of Oklahoma, in addition, Oklahoma also lost rigs in the Cana Woodford and Arkoma Woodford...still, to end up down 4 rigs after the addition of 4 Mississippian rigs, Oklahoma​ drillers​ still had to have shut down 3 more rigs in basins not tracked separately by Baker Hughes...meanwhile, all three Permian rigs were pulled out of Texas; two from Texas Oil District 8, which is the core Permian Delaware, and one from Texas Oil District 8A, which is the northern Permian Midland...for ​changes in ​natural gas, one natural gas rig was pulled out of the Arkoma Woodford, while two natural gas rigs were added in 'other' basins not tracked separately by Baker Hughes...​and ​in addition to the major producing states shown above, note that Alabama had the only two rigs that had been drilling in the state shut down this week; a year ago they had one rig running; that Montana also had its only rig shut down, after seeing as many as 4 running in the state at the beginning of December, and that a single land based rig was ​started back​ up​ in Florida, where there has been on and off drilling with one rig since May of the past year..

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note: there's more here...