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, June 30, 2019

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

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

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

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

The Latest US Oil Supply and Disposition Data from the EIA

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

June 26 2019 crude exports thru June 21 (source)

meanwhile, US oil refineries were reportedly using 17,337,000 barrels of crude per day during the week ending June 21st, 73,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 1,827,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 525,000 barrels per day short of what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+525,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil"....with that much oil unaccounted for, we have to figure that one or more of this week's crude oil metrics are again off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

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

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

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

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

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

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

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

June 28 2019 inventories as of June 21

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

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

This Week's Rig Count

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

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

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

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

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

June 28 2019 rig count summary

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

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note: there's more here...

Sunday, June 23, 2019

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

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

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

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

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

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

The Latest US Oil Supply and Disposition Data from the EIA

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

meanwhile, US oil refineries were reportedly using 17,264,000 barrels of crude per day during the week ending June 14th, 200,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 444,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 575,000 barrels per day short of what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+575,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil"....with that much oil unaccounted for, we have to figure that one or more of this week's crude oil metrics are again off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

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

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

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

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

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

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

This Week's Rig Count

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

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

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

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

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

June 21 2019 rig count summary

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

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

DUC well report for May

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

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

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

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

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note: there's more here...

Sunday, June 16, 2019

OPEC report shows 2nd quarter global oil output running a million barrels per day oil short of demand

oil prices fell for the 3rd week in four this week, despite an attack on oil product tankers near the Strait of Hormuz that had all the earmarks of a false flag operation by one of the US allies in the region...after rising nearly 1% to $53.99 a barrel last week on hopes for a resolution of a dispute with Mexico, US crude prices for July delivery opened higher and rose to $54.84 a barrel early Monday on hopes for an extension of the OPEC/Russia supply cut deal, but quickly reversed those gains on word that Russia was still undecided and ended 73 cents lower at $53.26 per barrel, as U.S.-China trade tensions continued to threaten demand for crude....oil prices then opened higher on Tuesday on Saudi assurances that OPEC+ would not let the oil market slide any further, but again faded near the close to end just 1 cent higher at $53.27 a barrel, as traders looked ahead to the American Petroleum Institute’s report scheduled for release after the market close....when that report showed another surprise build of US crude inventories oil prices tumbled in after hours trading and hence opened lower on Wednesday, and then fell steadily throughout the day after the EIA confirmed the surprise rise in US crude stocks, with oil ending down $2.13 at $51.14 per barrel as ongoing trade tensions between the United States and China further dampened the outlook for oil consumption growth...oil prices opened slightly lower Thursday and were falling up until reports of tanker explosions in the Gulf of Oman off Iran coast renewed fears about conflict in the Middle East following the tanker strikes last month and sent prices as much as 4.5% higher before settling $1.14 or 2.2% higher at $52.28 a barrel....oil prices then continued higher on Friday, initially adding 70 cents to Thursday's close, but slid through the afternoon to end just 23 cents, or 0.4% higher at $52.51 a barrel, as slowing economic conditions and an IEA forecast of slower demand growth overshadowed the ongoing tensions in the Middle East...so despite the clear threat to Middle East oil shipments, US oil prices still ended down 2.7% for the week in a continuation of a bearish trend that has seen prices fall 22% over the past 8 weeks...

natural gas prices, meanwhile, eased up from their 3 year lows of last week, with natural gas for July delivery rising first 2 cents on Monday and then 4.2 cents on Tuesday, as hotter weather forecasts helped extend a mild price rally...a 1.3 cent drop on Wednesday and a 6.1 cent drop after the storage report on Thursday were then mostly reversed by a 6.2 cent price jump on Friday to leave natural gas prices 5 cents higher on the week at $2.387 per mmBTU...

the natural gas storage report from the EIA for the week ending June 7th indicated that the quantity of natural gas held in storage in the US increased by 102 billion cubic feet to 2,088 billion cubic feet by the end of the week, which meant our gas supplies were 189 billion cubic feet, or 10.0% more than the 1,899 billion cubic feet that were in storage on June 8th of last year, while still 230 billion cubic feet, or 9.9% below the five-year average of 2,318 billion cubic feet of natural gas that have typically been in storage after the first week of June in recent years....this week's 102 billion cubic feet injection into US natural gas storage was at the low end of expectations, as most analysts had estimated an increase in supplies near 110 billion cubic feet, but was still higher than the average 92 billion cubic feet of natural gas that have been added to gas storage during the first week of June in recent years....the 981 billion cubic feet of natural gas that have been added to storage over the past 11 weeks has been the largest injection of gas into storage on record for any similar period this early in the injection season, probably about double the average 11 week build of the past decade, as the 712 billion cubic feet that were added during the same 11 weeks of 2014 was the only year that even appeared close...   

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending June 7th, showed that a modest decrease in our oil imports and and a modest increase in our oil refining resulted in a smaller increase in our stored crude supplies, but still the ninth increase in 12  weeks...our imports of crude oil fell by an average of 316,000 barrels per day to an average of 7,611,000 barrels per day, after rising by an average of 1,065,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 176,000 barrels per day to 3,122,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,489,000 barrels of per day during the week ending June 7th, 140,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day lower at 12,300,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,789,000 barrels per day during this reporting week...

meanwhile, US oil refineries were reportedly using 17,064,000 barrels of crude per day during the week ending June 7th, 126,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 316,000 barrels of oil per day were being added to of the oil that's in storage in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 590,000 barrels per day short of what was added to storage plus what the oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+590,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil"....with that much oil unaccounted for, we have to figure one or more of this week's crude oil metrics are again off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports was unchanged from last week at an average of 7,336,000 barrels per day last week, now 9.0% less than the 8,059,000 barrel per day average that we were importing over the same four-week period last year...the 316,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as the amount of oil stored in our Strategic Petroleum Reserve was unchanged...this week's crude oil production was reported to be 100,000 barrels per day lower at 12,300,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,800,000 barrels per day, while a 2,000 barrel per day increase to 480,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national total...last year's US crude oil production for the week ending June 8th was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was roughly 12.8% above that of a year ago, and 45.9% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 93.2% of their capacity in using 17,064,000 barrels of crude per day during the week ending June 7th, up from 91.8% of capacity the prior week, and finally back on par with the historical refinery utilization rate for this time of year....however, the 17,064,000 barrels per day of oil that were refined this week were still 2.5% below the 17,505,000 barrels of crude per day that were being processed during the week ending June 8th, 2018, when US refineries were operating at 95.7% of capacity....note that US refinery throughput had generally been in excess of 17 million barrels per day other than during the spring & fall maintenance seasons through most of the past two years up until the Venezuelan sanctions cut off the supply of heavy sour crude that US Gulf refineries are optimized for, and this week marks the first time refineries have processed over 17 million barrels per day since January 18th, suggesting a stabilization of the heavy crude supplies that those US refineries need...

with the increase in the amount of oil being refined, gasoline output from our refineries was similarly higher, increasing by 227,000 barrels per day to 10,276,000 barrels per day during the week ending June 7th, after our refineries' gasoline output had increased by 186,000 barrels per day the prior week....but even with those big increases in gasoline output, this week's gasoline production was still 1.7% less than the 10,451,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 165,000 barrels per day to 5,239,000 barrels per day, after our distillates output had increased by 222,000 barrels per day the prior week...but even with this week's decrease, the week's distillates production was still 2.5% more than the 5,111,000 barrels of distillates per day that were being produced during the week ending June 8th, 2018.... 

with the increase in our gasoline production, our supply of gasoline in storage at the end of the week rose for the fourth week in a row but for just the 5th time in 17 weeks, increasing by 764,000 barrels to 234,913,000 barrels over the week to June 7th, after our gasoline supplies had increased by 3,205,000 barrels over the prior week....the increase in our gasoline supplies was reduced this week because the amount of gasoline supplied to US markets increased by 436,000 barrels per day to 9,877,000 barrels per day and because our imports of gasoline fell by 395,000 barrels per day to 700,000 barrels per day, while our exports of gasoline fell by 148,000 barrels per day to 531,000 barrels per day...after our gasoline supplies had reached an all time record high eighteen weeks ago, and then had fallen by nearly 13% over 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, our gasoline supplies have now recovered by more than 4% over the past 4 weeks and now are back to 2% above the five year average of our gasoline supplies at this time of the year, while still fractionally lower than last June 8th's inventory level of 236,763,000 barrels...

meanwhile, with the pullback in our distillates production, our supplies of distillate fuels fell for the 9th time in 13 weeks, decreasing by 1,000,000 barrels to 128,372,000 barrels during the week ending June 7th, after our distillates supplies had increased by 4,572,000 barrels over the prior week....our distillates supplies reversed & fell this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 981,000 barrels per day to 4,368,000 barrels per day, while our imports of distillates rose by 11,000 barrels per day to 123,000 barrels per day, and while our exports of distillates fell by 339,000 barrels per day to 1,137,000 barrels per day....but even after this week's inventory decrease, our distillate supplies were still 11.9% higher than the 114,693,000 barrels of distillate that we had stored on June 8th, 2018, even as they fell to 4% below the five year average of distillates stocks for this time of the year...

finally, even with lower oil imports and lower oil production, our commercial supplies of crude oil in storage still increased for the fifteenth time in 21 weeks, rising by 2,206,000 barrels, from 483,264,000 barrels on May 31st from 485,470,000 barrels on June 7th...with that increase, our crude oil inventories rose to nearly 8% above the recent five-year average of crude oil supplies for this time of year, and were roughly more than 38.5% higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the first week of June, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of June 7th were 12.3% above the 432,441,000 barrels of oil we had stored on June 8th, of 2018, but at the same time still 5.1% below the 511,546,000 barrels of oil that we had in storage on June 9th of 2017, and 3.1% below the 500,911,000 barrels of oil we had stored on June 10th of 2016...   

OPEC's Monthly Oil Market Report

next we're going to review OPEC's June Oil Market Report (covering May OPEC & global oil data), which was released on Thursday of this past week and is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 61 of that report (pdf page 71), 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 avert any potential disputes that could arise if each member reported their own figures...

May 2019 OPEC crude output via secondary sources

so, as we can see from this table of official oil production data, OPEC's oil output fell by 236,000 barrels per day to 29,876,000 barrels per day in May, from their revised April production total of 30,111,000 barrels per day...however that April figure was originally reported as 30,031,000 barrels per day, so that means their production for May was really just a 155,000 barrel per day decrease from the previously reported figures (for your reference, here is the table of the official April OPEC output figures as reported a month ago, before this month's revisions)...

the largely involuntary Iranian output cuts of 227,000 barrels per day due to US sanctions on their exports was the primary reason for the cartel's output cut in May, as production cuts by the Saudis, by Nigeria, and by Venezuela were almost entirely offset by increases in output from Iraq, Angola and Gabon...that 94,000 barrels per day increase in the output from Iraq, however, now puts them well over the output allocations assigned to each member after their December 7th meeting, when OPEC agreed to cut 800,000 barrels per day as part of a 1.2 million barrel per day cut agreed to with Russia and other oil producers, while the output from Nigeria also remains slightly above quota despite their May decrease, as can be seen in the table of as can be seen in the table of OPEC production allocations we've included below:

February 6 2019 Platts on OPEC allocations

the above table came from a February 6th post on Saudi cuts and OPEC allocations at S&P Global Platts, and 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, whose oil exports are being sanctioned by the Trump administration, and Libya, which has been beset by a civil war, are exempt from any production quotas, and that only Libya has been producing more than they did in the 4th quarter of 2018, as can be seen in the fifth column of the OPEC production table above...

the next graphic from the report that we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from June 2017 to May 2019, and it comes from page 62 (pdf page 72) of the June 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... 

May 2019 OPEC report global oil supply

despite the sizable decrease in OPEC's production from what they reported a month ago, their preliminary estimate indicates that total global oil production still rose by 0.04 million barrels per day to 98.26 million barrels per day in May, but that came after April's total global output figure was revised down by 600,000 barrels per day from the 98.82 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 270,000 barrels per day in May after that revision, with higher oil output from US, Kazakhstan, Azerbaijan, Canada and the UK the major reasons for the non-OPEC production increase.... the 98.26 million barrels per day produced globally in May was still 0.44 million barrels per day, or 0.4% higher than the revised 97.82 million barrels of oil per day that were being produced globally in May a year ago (see the June 2018 OPEC report (online pdf) for the originally reported May 2018 details)...with the decrease in OPEC's output, their May oil production of 29,876,000 barrels per day represented 30.4% of what was produced globally during the month, down from the revised 30.7% share they contributed in April....OPEC's May 2018 production was reported at 31,869,000 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 1,728,000 fewer barrels per day of oil than they were producing a year ago, when they accounted for 32.6% of global output, with a 1,459,000 barrel per day drop in output from Iran and a 651,000 barrel per day decrease in the output from Venezuela from that time more than offsetting the year over year production increases of 269,000 barrels per day from Iraq, 219,000 barrels per day from Libya, and 196,000 barrels per day from the Emirates...  

despite the 40,000 barrels per day increase in global oil output that was seen during May, the 600,000 barrels per day downward revision to April's global output meant there was a large deficit in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...  

global oil demand:

May 2019 OPEC report global oil demand

the table above came from page 36 of the May OPEC Monthly Oil Market Report (pdf page 46), and it shows regional and total oil demand in millions of barrels per day for 2018 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2019 over the rest of the table...on the "Total world" line in the third column, we've circled in blue the figure that's relevant for May, which is their revised estimate of global oil demand during the second quarter of 2019...

OPEC is estimating that during the 2nd quarter of this year, all oil consuming regions of the globe will use 99.24 million barrels of oil per day, which was revised 0.04 million barrels of oil per day higher than their estimate for the 2nd quarter a month ago....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were only producing 98.26 million barrels per day during May, which means that there was a shortfall of around 980,000 barrels per day in global oil production when compared to the demand estimated for the month...

in addition, the downward revision of 600,000 barrels per day to April's global output that's implied in this report, combined with the 40,000 barrels per day upward revision to 2nd quarter demand, means that the 380,000 barrels per day shortfall that we had figured for April based on last month's figures would now be revised to a deficit of 1,020,000 barrels per day....combined with deficit of 980,000 barrels per day in May, that means that for the 2nd quarter to date, global oil production has been running a million barrels per day short of what's need to cover demand...

note that in green we've also circled a downward revision of 290,000 barrels per day to first quarter demand...that means that the global deficit of 100,000 barrels per day we had previously figured for March would have to be revised to a global oil surplus of 190,000 barrels per day...similarly, the 350,000 barrel per day global oil output surplus we had for February would now be a 640,000 barrel per day global oil output surplus, and the 260,000 barrel per day global oil output surplus we has for January would be revised to a 550,000 barrel per day oil output surplus...still, despite those first quarter surpluses, it's evident that with the large deficits in April and May, oil producers are now running a sizable shortfall vis a vis global demand..

This Week's Rig Count

the US rig count fell for the 15th time in seventeen weeks over the week ending June 14th and was thus at another 16 month low, with the least drilling activity since February 2nd 2018....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 6 rigs to 969 rigs this past week, which was also down by 90 rigs from the 1059 rigs that were in use as of the June 15th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil fell by 1 rig to 788 rigs this week, which was also a new 16 month low, 75 fewer oil rigs than were running a year ago, and less than half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 5 rigs to 181 natural gas rigs, which was also down by 13 rigs from the 194 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

with the addition of a rig offshore from Louisiana, the rig count in the Gulf of Mexico increased by 1 rig to 24 rigs this week, ending with a net of 22 rigs running offshore from Louisiana and 2 rigs deployed offshore from Texas....those totals are a 5 rig increase from the 19 rigs that were deployed in the Gulf in the same week a year ago, when 18 rigs were drilling in Louisiana waters and one was deployed offshore from Texas, and a 4 rig increase from the national total of 20 offshore rigs a year ago, when there was also a rig deployed in the waters offshore from Alaska at the time...

the count of active horizontal drilling rigs was down by 3 to 852 horizontal rigs this week, which was a new 15 month low for horizontal drilling and 80 fewer horizontal rigs than the 932 horizontal rigs that were in use in the US on June 15th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was down by 6 rigs to 68 directional rigs this week, but that was up by 1 rig from the 67 directional rigs that were operating during the same week of last year..... on the other hand, the vertical rig count was up by 3 rigs to 49 vertical rigs this week, but those were down from the 60 vertical rigs that that were in use on June 15th of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of June 14th, the second column shows the change in the number of working rigs between last week's count (June 7th) and this week's (June 14th) count, the third column shows last week's June 7th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 15th of June, 2018...   

June 14 2019 rig count summary

as you can see from the above, drilling activity in most of the country was little changed except for in Texas, which saw one oil rig pulled out of the Eagle Ford in the south and 5 oil rigs pulled out of the Permian basin in the western part of the state...since six rigs were shut down in Texas Oil District 8, which would be the core Permian Delaware, while two rigs were started up in Texas Oil District 7C, or the southern Permian Midland basin, we have to assume that one of those start-ups was of a conventional well, not targeting the Permian itself...meanwhile, all 5 of the natural gas rigs that were idled this week came out of basins not tracked separately by Baker Hughes, and with no changes shown above other than In Wyoming and Alaska, we'd be hard pressed to speculate where those might have been...for those natural gas rigs not to show up as a change in the state totals, what had to have happened would be the startup of an oil rig and an offsetting natural gas rig at the same time in the same state​....states with both kinds of wells, such as Texas, Oklahoma, and Louisiana, are the most likely places for that kind of switch to have occurred​...if you're really interested, the Baker Hughes North America Rotary Rig Count Pivot Table (xls) has the individual well records over the last 8 years, but unless you know what you're looking for, you'd have to plan on spending ​quite ​some time with that file to find what you'd want to know...

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note:  there’s more here

Sunday, June 9, 2019

natural gas prices hit 3 year lows; record oil output; record jump in oil + products inventories; rigs at a 16 month low

oil prices managed to eke out a small increase this week, but not before hitting a new 5-month low and crashing into a bear market mid-week...after falling 9% to $53.50 a barrel last week after Trump had threatened new tariffs on Mexico, the price of US crude for July delivery opened lower and fell as much as 2.6% early Monday, as traders remained rattled by Trump's tariff threats and his termination of India's trade status until Saudi comments that OPEC would continue their cuts through the second half of the year changed their focus and stabilized prices, which recovered to end 25 cents, or 0.5%, lower at $53.25 a barrel...oil prices started lower again on Tuesday on evidence that an economic slowdown would dent energy demand but again recovered in the afternoon to end 23 cents higher at $53.48 a barrel...however, oil prices tumbled in after hours trading after the API reported major inventory increases and thus opened lower again on Wednesday, and subsequently crashed Into a bear market after the EIA reported the biggest stock build in 30 years, with prices falling more than 4% to $50.60 a barrel before recovering near the close to finish down $1.80 at $51.68 a barrel...oil prices initially drifted lower again on Thursday but turned sharply higher near the close on a report that the Trump administration might delay its tariffs on Mexican imports, and closed up 91 cents at $52.59 a barrel...prices continued to rally on hopes for a deal with Mexico early Friday, then rose nearly 3% after Saudi Arabia said OPEC was close to agreeing to extend an output production cut beyond June to close $1.40 higher at $53.99 a barrel...oil prices thus erased their early losses and ended with a gain of nearly 1% for the week, despite having crossed the 20% loss threshold that is considered a bear market earlier in the week...

natural gas prices, meanwhile, tumbled to successive new three year lows, first on ongoing forecasts for below normal mid-June temperatures in the Great Lakes and Midwest states, which would delay air conditioning demand, and then on a near record storage build that exceeded analysts expectations...after falling 15.7 cents to a 35 month low of $2.454 per mmBTU last week, natural gas for July delivery fell 5.1 cents to a three year low of $2.403 per mmBTU on Monday, as the 11 to 15 day forecast called for below normal temperatures from the Rockies south to Texas and east to the Appalachians...persistence of that cool June forecast drove prices to another 3 year low of $2.378 per mmBTU on Wednesday, and then the EIA's report of a larger-than-expected increase in natural gas supplies knocked prices down 5.4 cents to yet another 3 year low of $2.324 per mmBTU on Thursday...to show you what this week's prices look like compared to the recent price trajectory, we'll include a graph of natural gas prices over the past 3 years...

June 8 2019 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 ​portion above ​represents natural gas prices for a week of trading between the last week of May 2016 and this past week, wherein the green bars represent the weeks when the price of natural gas went up, and red bars represent the weeks when the price of natural gas went down...for green bars, the starting natural gas price at the beginning of the week is at the bottom of the bar and the price at the end of the week is at the top of the bar, while for red or down weeks, the starting price is at the top of the bar and the price at the end of the week is at the bottom of the bar...also barely visible on this shrunken "candlestick" style graph are the very faint grey "wicks" above and below each bar, to indicate trading prices during the week that were above or below the opening to closing price range for that week...(the lighter red & green bars at the bottom of the graph represent the trading volume for each day, which doesn't concern us today)...as you can see, natural gas prices have rarely plumbed this depth, and the last time they did, drilling new wells for natural gas virtually dried up, with the ​national ​natural gas rig count falling to as low as 81 rigs the following summer, which was the lowest natural gas rig count ​over the time Baker Hughes had been keeping records...

the natural gas storage report from the EIA for the week ending May 31st indicated that the quantity of natural gas held in storage in the US increased by 119 billion cubic feet to 1,986 billion cubic feet by the end of the week, which meant our gas supplies were 182 billion cubic feet, or 10.1% more than the 1,804 billion cubic feet that were in storage on June 1st of last year, while still 240 billion cubic feet, or 10.8% below the five-year average of 2,226 billion cubic feet of natural gas that have typically been in storage as of the end of May in recent years....this week's 119 billion cubic feet injection into US natural gas storage was above the median forecast of a Reuters' poll of analysts for a 109 billion cubic foot increase in supplies, and likewise ​much ​higher than the average 102 billion cubic feet of natural gas that have been added to gas storage during the same week of spring in recent years....the 119 billion cubic feet injection also appears to be the third largest injection over the past 5 years, and the 879 billion cubic feet of natural gas that have been added to storage over the past 10 weeks has been the largest injection of gas into storage on record for any similar period this early in the injection season...

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 May 31st, showed that a big increase in our oil imports resulted in a similar increase in our stored crude supplies, the eighth such increase in 11 weeks...our imports of crude oil rose by an average of 1,065,000 barrels per day to an average of 7,927,000 barrels per day, after falling by an average of 81,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 19,000 barrels per day to 3,298,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,629,000 barrels of per day during the week ending May 31st, 1,084,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be 100,000 barrels per day higher at a record 12,400,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 17,029,000 barrels per day during this reporting week...

meanwhile, US oil refineries were​ reportedly​ using 16,938,000 barrels of crude per day during the week ending May 31st, 171,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 967,000 barrels of oil per day were being added to of the oil that's in storage in the US....hence, it appears that this week's crude oil figures from the EIA seem to indicate that our total working supply of oil from net imports and from oilfield production was 876,000 barrels per day short of what was added to storage plus what the oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+876,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil"....with that much oil unaccounted for, we have to figure one or more of this week's crude oil metrics are off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports rose to an average of 7,336,000 barrels per day last week, still 7.5% less than the 7,934,000 barrel per day average that we were importing over the same four-week period last year...the 967,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as the amount of oil stored in our Strategic Petroleum Reserve was unchanged...this week's crude oil production was reported to be 100,000 barrels per day higher at a record 12,400,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at a record 11,900,000 barrels per day, while a 4,000 barrel per day increase to 478,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national total...last year's US crude oil production for the week ending June 1st was rounded to 10,800,000 barrels per day, so this reporting week's rounded oil production figure was roughly 14.8% above that of a year ago, and 47.1% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 91.8% of their capacity in using 16,938,000 barrels of crude per day during the week ending May 31st, up from 91.2% of capacity the prior week, but still a bit below the recent historical refinery utilization rate for this time of year​, when refineries are often running flat out​....likewise, the 16,938,000 barrels per day of oil that were refined this week were 2.5% below the 17,369,000 barrels of crude per day that were being processed during the week ending June 1st, 2018, when US refineries were operating at 95.4% of capacity... 

with the increase in the amount of oil being refined, gasoline output from our refineries was similarly higher, increasing by 186,000 barrels per day to 10,049,000 barrels per day during the week ending May 31st, after our refineries' gasoline output had decreased by 20,000 barrels per day the prior week....with that increase in gasoline output, this week's gasoline production was 4.0% more than the 9,658,000 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) jumped by 222,000 barrels per day to 5,404,000 barrels per day, after our distillates output had decreased by 24,000 barrels per day the prior week...but even with this week's big increase, the week's distillates production was only 1.5% more than the 5,324,000 barrels of distillates per day that were being produced during the week ending June 1st, 2018.... 

with the increase in our gasoline production, our supply of gasoline in storage at the end of the week rose for the fourth time in 16 weeks, increasing by 3,205,000 barrels to 234,149,000 barrels over the week to May 31st, after our gasoline supplies had increased by 2,204,000 barrels over the prior week....our gasoline supplies rose this week as our imports of gasoline rose by 8,000 barrels per day to 1,095,000 barrels per day, and as our exports of gasoline fell by 38,000 barrels per day to 679,000 barrels per day, while the amount of gasoline supplied to US markets increased by 47,000 barrels per day to 9,441,000 barrels per day....after our gasoline supplies had reached an all time record high seventeen weeks ago, and then had fallen by nearly 13% over 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, our gasoline supplies have now recovered by over 4% in the past 3 weeks and now are back to 2% above the five year average of our gasoline supplies at this time of the year (while still 2.0% lower than last June 1st's inventory level of 239,034,000 barrels), as replacement gasoline supplies have been arriving from Asia & Europe at a 1.2 million barrel per day clip over that span...

meanwhile, with the big increase in our distillates production, our supplies of distillate fuels rose for the 4th time in 12 weeks, increasing by 4,572,000 barrels to 129,372,000 barrels during the week ending May 31st, after our distillates supplies had decreased by 1,615,000 barrels over the prior week....our distillates supplies reversed & rose this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 895,000 barrels per day to a 5 month low of 3,387,000 barrels per day, while our imports of distillates fell by 65,000 barrels per day to 112,000 barrels per day, and while our exports of distillates rose by 168,000 barrels per day to 1,476,000 barrels per day....after this week's inventory ​increase, our distillate supplies were 10.8% higher than the 116,794,000 barrels of distillate that we had stored on June 1st, 2018, even as they were still 3% below the five year average of distillates stocks for this time of the year...

finally, with much higher oil imports and record oil production, our commercial supplies of crude oil in storage increased for the fourteenth time in 20 weeks, rising by 6,671,000 barrels, from 476,493,000 barrels on May 24th to 483,264,000 barrels on May 31st...with that increase, our crude oil inventories rose to 6% above the recent five-year average of crude oil supplies for this time of year, and were well more than 35% higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the end of May, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of May 31st were 10.7% above the 436,584,000 barrels of oil we had stored on June 1st, of 2018, but at the same time still 5.8% below the 513,207,000 barrels of oil that we had in storage on June 2nd of 2017, and 3.7% below the 501,844,000 barrels of oil we had stored on June 3rd of 2016...  

with that large increase in our crude oil supplies, combined with similar larger than normal increases in supplies of the products made from oil, it turns out that this week saw the largest increase in oil & oil product inventories on record, as you can see in the graph below...

June 7 2019 total oil & products inventory as of May 31

the above graph was taken from a Zero Hedge post titled Oil Crashes Into Bear Market After Biggest Stock Build In 30 Years and it shows the weekly change in millions of barrels in the amount of oil & oil products in storage in the US from 1990 to the current week, which is the extent of the EIA's records on this metric....over that period, the weeks when total inventories increased are represented by a line above the horizontal zero axis, whereas the weeks when total inventories decreased are represented by a line pointing down from the zero line...in the upper right corner, they have marked the​ total​ increase for this week at 22.4 million barrels, and then have extended a green dashed line back from that ​marker ​across the length of the graph to illustrate that no prior week had such a large increase...in addition to the 6,671,000 barrel increase in oil inventories, the 3,205,000 barrel increase in gasoline inventories, and the 4,572,000 barrel increase in distillate inventories we have covered today, the past week also saw a 2.5 million barrel increase in propane/propylene inventories, a 4.6 million barrel increase in inventories of 'other oils', which includes asphalt, road oil, kerosene, and unfinished oil, and modest increases in inventories of jet fuel, residual fuel oil and other minor products to get to the record inventory increase you see graphed above...

This Week's Rig Count

the US rig count fell for the 14th time in sixteen weeks this past week and in so doing fell to a 16 month low, equaling the rig count of early February 2018....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 9 rigs to 975 rigs over the week ending June 7th, which was also down by 87 rigs from the 1062 rigs that were in use as of the June 8th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil fell by 11 rigs to 789 rigs this week, which was also a 16 month low, 73 fewer oil rigs than were running a year ago, and less than half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations rose by 2 rigs to 186 natural gas rigs, which was still down by 12 rigs from the 198 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

the rig count in the Gulf of Mexico was unchanged at 23 rigs this week, with 2 rigs deployed offshore from Texas and 21 rigs running offshore from Louisiana, which was a decrease of 1 rig for Texas offshore and an increase of 1 rig for Louisiana offshore....those totals are still an increase from the 19 rigs that were deployed in the Gulf in the same week a year ago, when 18 rigs were drilling in Louisiana waters and one was offshore from Texas, and up from the national total of 20 offshore rigs a year ago, when ​there was also ​a rig ​deployed in the waters offshore from Alaska at the time...

the count of active horizontal drilling rigs was down by 7 to 855 horizontal rigs this week, which was a 15 month low for horizontal drilling and 79 fewer horizontal rigs running this week than the 934 horizontal rigs that were in use in the US on June 8th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count was down by 6 rigs to 46 vertical rigs this week, which was also down from the 66 vertical rigs that that were operating during the same week of last year... on the other hand, the directional rig count was up by 4 rigs to 74 directional rigs this week, and those were up by 7 rigs from the 67 directional rigs that were in use on June 8th of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of June 7th, the second column shows the change in the number of working rigs between last week's count (May 31st) and this week's (June 7th) count, the third column shows last week's May 31st active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 8th of June, 2018...  

June 7 2019 rig count summary

as you can see, the largest decreases this week were in Texas, and specifically in the Permian basin in the western part of the state....of those, four rigs were shut down in Texas Oil District 8, which would be the core Permian Delaware, while single rigs were also idled in Texas Oil District 8A, or the northern Permian Midland basin, and in Texas Oil District 7C, or the southern Permian Midland basin...the other Texas decrease came out of the Eagle Ford shale in the southeast part of the state, as two Eagle Ford oil rigs were shut down, leaving 66, while an 8th rig targeting natural gas in the Eagle Ford was started up at the same time, which shows up as a decrease of two rigs in Texas Oil District 1 and a single rig increase in Texas Oil District 2...​.​two natural gas rigs were also added in Texas Oil District 10, the panhandle's Granite Wash, where an oil rig was shut down at the same time, leaving the Granite Wash with 5 oil rigs and 3 targeting natural gas....elsewhere, two more natural gas rigs were added in northern Louisiana's Haynesville shale, while another natural gas rig started up in an "other" basin not tracked separately by Baker Hughes...at the same time, 3 natural gas rigs were shut down in the Marcellus, one in West Virginia and two in Pennsylvania, and another natural gas rig was idled in the Niobrara chalk of the Rockies front range, which is now back to being all oil rigs...meanwhile, other than the changes in major producing states shown above, Alabama drillers also added a rig this week and now are running three, the most in the state since July 14th of last year, while the only rig deployed in Florida was pulled out, leaving Florida with none, par for the course in the state over the last four years...

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note: there's more here...