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, April 11, 2021

gasoline imports at a 98 week high despite highest refinery utilization in 54 weeks

oil prices fell for the fourth week in five this week, on rising oil supplies and on the prospect of pandemic related falling demand...after rising 0.8% to $61.45 a barrel last week on expectations that the Biden infrastructure plan would increase demand for oil, the contract price of US light sweet crude for May delivery opened 5 cents higher on Monday but tumbled nearly 5% from there on the likelihood of a increase in oil supplies, from both OPEC's planned production hikes and as a result of the possible easing of US sanctions on Iran, as oil prices closed down $2.80 at $58.65 a barrel...oil prices rose early on Tuesday as a drop in the U.S. dollar made crude a more attractive buy, and hung on to close 68 cents, or 1.2%, higher at $59.33 a barrel on strong economic reports from the US and China and on a stronger global growth forecast from the IMF...oil prices fell in after hours trading Tuesday after the API surprised traders with big product inventory increases and then opened lower on Wednesday, but reversed to climb marginally as traders looked past the EIA's rising gasoline and distillate supplies and turned their attention to the second successive weekly crude stockpile withdrawal, and settled 44 cents higher at $59.77 a barrel on an improving global economic outlook, even as gains were capped by rising gasoline inventories and fears that new coronavirus outbreaks would weaken a global recovery in fuel demand...the brief rally faded on Thursday, however, with oil prices pressured as rising cases of COVID-19 threatened to slow global economies, but recovered to end down just 17 cents at $59.60 a barrel as a falling dollar and rising stock markets offset earlier declines caused by the big increase in gasoline stockpiles and subdued demand compared to pre-pandemic levels...oil prices edged up in early Asian trading on Friday, supported by a weaker dollar, as traders weighed rising supplies and the impact on fuel demand from the COVID-19 pandemic, but turned lower in rangebound US trading on Friday, on rising supplies from major producers and on concerns over a mixed picture on the pandemic’s impact on fuel demand, and finished the session 28 cents lower at $59.32 a barrel, thus ending the week down 3.5%, the biggest weekly loss since mid-March....

natural gas prices also finished lower this week as the heating season appeared to be ending on warming April weather....after rising 0.8% to $2.639 per mmBTU last week on record LNG exports and on a bullish weekly storage report, the contract price of natural gas for May delivery opened 4.6 cents lower on Monday and tumbled 4.9% to a 12.8 cent loss at $2.511 per mmBTU, as weather forecasts shifted much warmer for the next couple of weeks, reducing both heating and power demand through mid-April...natural gas prices rebounded early Tuesday on a cooler revision to the latest weather forecast but failed to hold the gains, closing down another 5.5 cents at 2.456 per mmBTU...natural gas rebounded again on Wednesday, as weather models aligned to forecast a colder trend for mid-April, and this time held onto a 6.4 cent gain at $2.520 per mmBTU...however, gas prices waffled around that price on Thursday as the weekly storage data failed to offer any surprises and weather models maintained a warm pattern for the near term and the May contract price ultimately settled two-tenths of a cent higher at $2.522 per mmBTU...a similar rangebound natural gas trade unfolded on Friday and prices barely moved before adding on another four-tenths of a cent, and thus finished the week at $2.526 per mmBTU, still 4.3% lower than the prior week's close...

the natural gas storage report from the EIA for the week ending April 2nd indicated that the amount of natural gas held in underground storage in the US rose by 20 billion cubic feet to 1,784 billion cubic feet by the end of the week, which left our gas supplies 235 billion cubic feet, or 11.6% below the 2,019 billion cubic feet that were in storage on April 2nd of last year, and 36 billion cubic feet, or 1.3% below the five-year average of 1,808 billion cubic feet of natural gas that have been in storage as of the 2nd of April in recent years....the 20 billion cubic feet that were added to US natural gas storage this week was less than the average forecast of a 27 billion cubic foot addition from an S&P Global Platts survey of analysts, and was also less than the 30 billion cubic feet added to natural gas storage during the corresponding week of a year earlier, but was well more than the average addition of 8 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years... 

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending April 2nd indicated that because of a decrease in our oil production and modest increases in our oil exports and our oil refining, we needed to withdraw oil from our stored commercial crude supplies for the second time in seven weeks and for the 24th time in the past thirty-seven weeks....our imports of crude oil rose by an average of 119,000 barrels per day to an average of 6,264,000 barrels per day, after rising by an average of 523,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 260,000 barrels per day to an average of 3,434,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,830,000 barrels of per day during the week ending April 2nd, 141,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly 200,000 barrels per day lower at 10,900,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production appears to total an average of 13,730,000 barrels per day during this reporting week... 

meanwhile, US oil refineries reported they were processing 15,044,000 barrels of crude per day during the week ending April 2nd, 103,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA's surveys indicated that a net of 503,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US....so based on that reported & estimated data, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from storage, and from oilfield production was 811,000 barrels per day less than what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (+811,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil", thus suggesting there must have been a error or errors of that magnitude in this week's oil supply & demand figures that we have just transcribed....however, since most everyone treats these weekly EIA reports as gospel and since these figures often drive oil pricing and hence decisions to drill or complete wells, we'll continue to report them as they're published, just as they're watched & believed to be accurate by most everyone in the industry....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 5,838,000 barrels per day last week, which was 5.0% less than the 6,144,000 barrel per day average that we were importing over the same four-week period last year... the 503,000 barrel per day net withdrawal from our crude inventories was due to a 503,000 barrel per day withdrawal from our commercially available stocks of crude oil, while the oil supplies in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported to be 200,000 barrels per day lower at 10,900,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 300,000 barrels per day lower at 10,400,000 barrels per day, while a 13,000 barrel per day increase to 458,000 barrels per day in Alaska's oil production added 100,000 barrels per day the rounded national total (EIA's math)....our record high US crude oil production during the week ending March 13th 2020 was at a rounded 13,100,000 barrels per day, so this reporting week's rounded oil production figure was 16.8% below that of our production peak, yet still 29.3% above 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 84.0% of their capacity while using those 15,044,000 barrels of crude per day during the week ending April 2nd, up from 83.9% of capacity during the prior week, and the highest refinery utilization in 54 weeks, reflecting the utilization level during the last week before the Covid slowdown...while the 15,044,000 barrels per day of oil that were refined this week were 10.3% higher than the 13,634,000 barrels of crude that were being processed daily during the week ending April 3rd of last year, they were still 6.6% below the 16,100,000 barrels of crude that were being processed daily during the week ending April 5th, 2019, when US refineries were operating at a still low 87.5% of capacity...

even with the increase in the amount of oil being refined, the gasoline output from our refineries decreased by 60,000 barrels per day to 9,279,000 barrels per day during the week ending April 2nd, after our gasoline output had increased by 762,000 barrels per day over the prior week...while this week's gasoline production was 59.5% higher than the 5,818,000 barrels of gasoline that were being produced daily over the same week of last year, it was still 6.9% lower than the March 13th 2020 pre-pandemic high of 9,972,000 barrels per day....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 99,000 barrels per day to 4,639,000 barrels per day, after our distillates output had increased by 137,000 barrels per day over the prior week... but since the onset of the pandemic didn't appear to impact distillates' production, this week's distillates output was still 6.9% lower than the 4,982,000 barrels of distillates that were being produced daily during the week ending April 3rd, 2020...

even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the fifteenth time in twenty-one weeks, and for 19th time in 38 weeks, rising by 4,044,000 barrels to 234,588,000 barrels during the week ending April 2nd, after our gasoline inventories had decreased by 1,735,000 barrels over the prior week...our gasoline supplies increased this week because our imports of gasoline rose by 678,000 barrels per day to a 98 week high of 1,297,000 barrels per day while our exports of gasoline rose by 251,000 barrels per day to 792,000 barrels per day, and because the amount of gasoline supplied to US users decreased by 101,000 barrels per day to 8,891,000 barrels per day...but even after this week's inventory increase, our gasoline supplies were 8.8% lower than last April 3rd's gasoline inventories of 257,303,000 barrels, and about 2% below the five year average of our gasoline supplies for this time of the year... 

meanwhile, even with the decrease in our distillates production, our supplies of distillate fuels increased for the 4th time in 10 weeks and for the 12th time in thirty-two weeks, rising by 1,452,000 barrels to 145,547,000 barrels during the week ending April 2nd, after our distillates supplies had increased by 2,542,000 barrels during the prior week....our distillates supplies rose by less this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 449,000 barrels per day to 3,664,000 barrels per day, because our exports of distillates rose by 398,000 barrels per day to 1,092,000 barrels per day, and because our imports of distillates fell by 116,000 barrels per day to 325,000 barrels per day...after this week's inventory increase, our distillate supplies at the end of the week were 18.6% above the 122,724,000 barrels of distillates that we had in storage on April 3rd, 2020, and rose to about 5% above the five year average of distillates stocks for this time of the year...

finally, with the increase in our oil exports and the recovery in our refinery throughput, our commercial supplies of crude oil in storage fell for the 13th time in the past twenty-one weeks and for the 25th time in the past year, decreasing by 3,522,000 barrels, from 501,835,000 barrels on March 26th to 498,313,000 barrels on April 2nd...after this week's decrease, our commercial crude oil inventories fell to 3% above the most recent five-year average of crude oil supplies for this time of year, and to 44.6% above the average of our crude oil stocks as of the first weekend of April over the 5 years at the beginning of this decade, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first topped 400 million barrels....since our crude oil inventories had jumped to record highs during the spring lockdowns of last year, after generally rising over the past two and a half years, except for summers and during the 10 weeks prior to the Texas freeze, after generally falling from a record high over the year and a half prior to September of 2018, our commercial crude oil supplies as of April 2nd were 2.9% more than the 484,370,000 barrels of oil we had in commercial storage on April 3rd of 2020, and 9.1% more than the 456,550,000 barrels of oil that we had in storage on April 5th of 2019, and also 16.3% more than the 428,638,000 barrels of oil we had in commercial storage on April 6th of 2018...      

This Week's Rig Count

Note: this week's rig count includes 8 days, since last week's report was released on Thursday in advance of the Good Friday...nonetheless, the rig count rose for the 27th time over the past 30 weeks during the week ending April 9th, but it still remains down by 45.5% from the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US was up by 2 to 432 rigs this past week, which was still down by 170 rigs from the 602 rigs that were in use as of the April 10th report of 2020, and was 1,497 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in their first attempt to put US shale out of business....

The number of rigs drilling for oil was unchanged at 331 oil rigs this week, after rising by 13 oil rigs the prior week, leaving us with 167 fewer oil rigs than were running a year ago, and 20.6% 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 was up by two to 93 natural gas rigs, which was only down by 3 natural gas rigs from the 96 natural gas rigs that were drilling a year ago, but still just 5.8% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition to those rigs drilling for oil or gas, two rigs classified as 'miscellaneous' continued to drill this week, one in the middle of the Permian basin in MIdland county Texas, and the other in Lake County, California, while a year ago there were also two such "miscellaneous" rigs deployed...

The Gulf of Mexico rig count was down by 3 to 11 rigs this week, with 10 of those rigs drilling for oil in Louisiana's offshore waters and 1 continuing to drill for oil in Alaminos Canyon offshore from Texas...that was 7 fewer Gulf of Mexico rigs than the 18 rigs drilling in the Gulf a year ago, when all 18 Gulf rigs were drilling for oil offshore from Louisiana...since there are no rigs operating off of other US shores at this time, nor were there a year ago, this week's national offshore rig totals are equal to the Gulf rig counts....

The count of active horizontal drilling rigs was up by 3 to 394 horizontal rigs this week, which was still down by 151 rigs from the 545 horizontal rigs that were in use in the US on April 10th of last year, and less than a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014....meanwhile, the directional rig count was down by one rig to 18 directional rigs this week, and those were also down by 17 from the 35 directional rigs that were operating during the same week a year ago....at the same time, the vertical rig count was unchanged at 20 vertical rigs this week, and those were down by 2 from the 22 vertical rigs that were in use on April 10th of 2020....

The details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of April 9th, the second column shows the change in the number of working rigs between last week's count (April 1st) and this week's (April 9th) count, the third column shows last week's April 1st active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 10th of April, 2020..    

April 9 2021 rig count summary

as you can see, there were ​just a few changes this week, after widespread new activity last week...checking for the details on the Permian basin in Texas from the Rigs by State file at Baker Hughes, we do find that that one rig was added in Texas Oil District 8, which includes the core Permian Delaware, while one rig was pulled out of Texas Oil District 7C, which includes the southernmost counties of the Permian Midland basin, which thus leaves us with no change in the rig count in the Texas Permian this week.....elsewhere in Texas, there was one rig added in Texas Oil District 1, while a rig was pulled out from Texas Oil District 4, which both could have been in the Eagle Ford shale, which stretches in a narrow band through the southeast part of the state, still leaving no net change in that basin either...at the same time, there was also a rig added in Texas Oil District 6, which must have been targeting that region's Haynesville shale, since the Haynesville shale count was unchanged in northern Louisiana....the Texas count is still unchanged, however, because an offshore platform in the state's waters was shut down at the same time, while the Louisiana is only down one despite the loss of two offshore rigs because there was a land rig startup in an unnamed basin in the southern part of the state...elsewhere, two more oil rigs were added in a Utah basin not tracked by Baker Hughes, more than likely the Uinta, and another oil rig was added in Oklahoma, also in a basin not tracked by Baker Hughes, while an oil rig was shut down in Wyoming, which could have been operating in any one of three basins in that state Baker Hughes doesn't track..for this week's two additions of natural gas rigs, we have the rig that was added in the Haynesville shale, and another rig that was added in Ohio's Utica shale at the same time...

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