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, May 9, 2021

record jump in oil exports leads to largest inventory draw since January​, with ​12 million barrels still unaccounted for

record jump in oil exports to a 54 week high leads to largest crude inventory draw since January​, with ​12 million barrels still unaccounted for; refinery utilization rate is highest in 58 weeks; ​gas rigs see largest increase in 37 months

oil prices rose this week as traders antipitated higher demand for fuel as global economies eased Covid-related restrictions... after rising 2.3% to $63.58 a barrel last week on strong economic reports and on rising product demand, the contract price of US light sweet crude for June delivery traded lower Monday morning in Asia as surging COVID-19 cases in India dampened fuel demand hopes, but opened higher and rose in New York trading, supported by a weaker U.S. dollar, as hopes for a demand recovery outweighed worries about surging infections in India, with oil settling 91 cents higher at $64.49 a barrel....oil prices moved higher a second day on Tuesday as traders bet that easing COVID-19 restrictions in the U.S. and Europe would lead to higher fuel demand, and closed $1.20, or nearly 2% higher at $65.69 a barrel, after more U.S. states eased lockdowns and the EU sought to encourage travellers...oil prices extended those gains in after hours trading after the American Petroleum Institute reported the largest draw from US crude supplies since January, and opened 76 cents higher on Wednesday, but then faded late to close 6 cents lower at $65.63 a barrel, as traders reconsidered the outlook for oil demand in light of rising gasoline supplies...oil prices moved lower again on Thursday after Saudi Arabia cut the selling price of its crude to Asia, and ended trading down 92 cents at $64.71 a barrel amid uneven recovery signs among countries still battling the coronavirus...oil prices edged higher in Asia trading early Friday as global economic recovery and easing travel curbs in the US and Europe buoyed the fuel demand outlook, even as the surging pandemic in India capped prices, and June oil went on to close 19 cents higher to $64.90 a barrel in New York, and thus posted a 2.1% gain on the week...

natural gas prices also edged higher this week on near record exports and on forecasts for a cooling trend...after rising 4.0% to $2.931 per mmBTU last week on record exports and on declining gas field output, the contract price of natural gas for June delivery opened higher on Monday and climbed 3.5 cents to a 10 week high of $2.966 per mmBTU, despite forecasts for milder weather, on forecasts for near record exports...prices held steady at a 10-week high on Tuesday on forecasts for cooler weather, settling a tenth of a cent higher at $2.967 per mmBTU. but then slid 2.9 cents to $2.938 per mmBTU on Wednesday ahead of expectations for a more substantial build in underground inventories with this week’s EIA storage report...however, prices​ ​slipped​ ​again on Thursday, despite a bullish inventory print and continued robust demand for both LNG and pipeline exports, and settled a penny lower at $2.928 per mmBTU...natural gas​ ​prices rebounded Friday, rising 3.0 cents to $2.958 per mmBTU, on forecasts for cooler weather and higher heating next week and hence finished week 0.9% higher, even as they failed to penetrate the $3 level or match the highs set earlier in the week...

the natural gas storage report from the EIA for the week ending April 30th indicated that the amount of natural gas held in underground storage in the US rose by 60 billion cubic feet to 1,958 billion cubic feet by the end of the week, which left our gas supplies 345 billion cubic feet, or 15.0% below the 2,303 billion cubic feet that were in storage on April 30th of last year, and 61 billion cubic feet, or 3​.0% below the five-year average of 2,019 billion cubic feet of natural gas that have been in storage as of the 30th of April in recent years....the 60 billion cubic feet that were added to US natural gas storage this week was more than the average forecast of a 51 billion cubic foot addition from an S&P Global Platts survey of analysts, but was well below the average addition of 81 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years, as well as well below the 103 billion cubic feet added to natural gas storage during the corresponding week of 2020...

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 30th showed that because of a drop in our oil imports and a big increase in our oil exports, we needed to withdraw oil from our stored commercial crude supplies for the fourth time in eleven weeks and for the 26th time in the past forty-one weeks....our imports of crude oil fell by an average of 1,164,000 barrels per day to an average of 5,451,000 barrels per day, after risng by an average of 1,211,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 1,581,000 barrels per day to an average of 4,122,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 1,329,000 barrels of per day during the week ending April 30th, 2,745,000 fewer barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly unchanged at 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 12,229,000 barrels per day during this reporting week... 

meanwhile, US oil refineries reported they were processing 15,243,000 barrels of crude per day during the week ending April 30th, 225,000 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 1,291,000 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 1,722,000 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 (+1,722,000) 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....furthermore, since last week's EIA fudge factor was at (-150,000) barrels per day, there was a 1,872,000 barrel per day balance sheet difference in the unaccounted for crude oil figure from a week ago, which renders the week over week supply and demand changes we have just transcribed meaningless....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 fell to an average of 5,831,000 barrels per day last week, which is​ still​ 7.8% more than the 5,408,000 barrel per day average that we were importing over the same four-week Covid impacted period last year... the 1,291,000 barrel per day net withdrawal from our crude inventories included a 150,000 barrel per day withdrawal from our Strategic Petroleum Reserve, space in which has been leased for commerical purposes, and a 1,141,000 barrel per day withdrawal from our commercially available stocks of crude oil....this week's crude oil production was reported to be unchanged at 10,900,000 barrels per day even though the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 10,400,000 barrels per day because a 15,000 barrel per day increase in Alaska's oil production to 457,000 barrels per day added 100,000 barrels per day to the rounded national total....our prepandemic record high US crude oil production was at a rounded 13,100,000 barrels per day​ ​during the week ending March 13th 2020, so this reporting week's reported 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 86.5% of their capacity while using those 15,243,000 barrels of crude per day during the week ending April 30th, up from 85.4% the prior week, and the highest refinery utilization rate in 58 weeks, reflecting the refinery utilization level during the last week before the pandemic related refinery slowdown...while the 15,243,000 barrels per day of oil that were refined this week were 17.4% higher than the 12,976,000 barrels of crude that were being processed daily during the week ending May 1st of last year, they were still 7.1% below the 16,405,000 barrels of crude that were being processed daily during the week ending May 3rd, 2019, when US refineries were operating at a still low 88.9% of capacity...

even with this week's increase in the amount of oil being refined, the gasoline output from our refineries decreased by 483,000 barrels per day to 9,146,000 barrels per day during the week ending April 30th, after our gasoline output had increased by 243,000 barrels per day over the prior week...while this week's gasoline production was 36.4% higher than the 6,705,000 barrels of gasoline that were being produced daily over the same week of last year, it was still 8.3% lower than the March 13th 2020 pre-pandemic high of 9,974,000 barrels per day, and 9.7% below the gasoline production of 10,129,000 barrels per day during the week ending May 3rd, 2019....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 128,000 barrels per day to 4,498,000 barrels per day, after our distillates output had increased by 71,000 barrels per day over the prior week... and since the onset of the pandemic last year didn't appear to impact distillates' production, this week's distillates output was still 11.5% lower than the 5,082,000 barrels of distillates that were being produced daily during the week ending May 1st, 2020...

even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the nineteenth time in twenty-five weeks, and for 23rd time in 43 weeks, rising by 737,000 barrels to 235,811,000 barrels during the week ending April 30th, after our gasoline inventories had increased by 92,000 barrels over the prior week...our gasoline supplies managed to increase again this week because the amount of gasoline supplied to US users decreased by 13,000 barrels per day to 8,864,000 barrels per day and because our exports of gasoline fell by 49,000 barrels per day to 555,000 barrels per day while our imports of gasoline fell by 1,000 barrels per day to 1,020,000 barrels per day....but even after five straight inventory increases, our gasoline supplies still were 8.0% lower than last May 1st's gasoline inventories of 256,407,000 barrels, and about  2% below the five year average of our gasoline supplies for this time of the year... 

with the decrease in our distillates production, our supplies of distillate fuels also decreased for the 10th time in 20 weeks and for the 24rd time in thirty-six weeks, falling by 2,896,000 barrels to 136,153,000 barrels during the week ending April 30th, after our distillates supplies had decreased by 3,342,000 barrels during the prior week....our distillates supplies fell by a bit less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 205,000 barrels per day to 4,125,000 barrels per day, while our imports of distillates rose by 34,000 barrels per day to 68,000 barrels per day, and while our exports of distillates rose by 48,000 barrels per day to 956,000 barrels per day....after four consecutive inventory decreases, our distillate supplies at the end of the week were 10.1% below the 151,490,000 barrels of distillates that we had in storage on May 1st, 2020, and about 2% below the five year average of distillates stocks for this time of the year...

finally, with the drop in our oil imports and the big jump in our oil exports, our commercial supplies of crude oil in storage fell for the 14th time in the past twenty-five weeks and for the 27th time in the past year, decreasing by 7,990,000 barrels, from 493,107,000 barrels on April 23rd to 485,117,000 barrels on April 30th....after this week's decrease, our commercial crude oil inventories fell to about 2% below the most recent five-year average of crude oil supplies for this time of year, but were still about 37.3% above the average of our crude oil stocks as of the end 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 Covid lockdowns of last spring, our commercial crude oil supplies as of April 30th ​were 9.1% less than the 532,221,000 barrels of oil we had in commercial storage on May 1st of 2020, but still 4.0% more than the 466,604,000 barrels of oil that we had in storage on May 3rd of 2019, and also 11.8% more than the 433,758,000 barrels of oil we had in commercial storage on May 4th of 2018...     

This Week's Rig Count

The US rig count rose for the 30th time over the past 34 weeks during the week ending May 7th, but is still down by 43.5% from the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US was up by 8 to 448 rigs this past week, which was also up by 74 rigs from the pandemic hit 374 rigs that were in use as of the May 8th report of 2020, but was still 1,481 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 up by 2 to 344 oil rigs this week, after falling by 1 the prior week, thus giving us 52 more oil rigs than were running a year ago, but still just 21.4% 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 7 to 103 natural gas rigs, the biggest gas rig jump since March 2018, which was also up by 23 natural gas rigs from the 80 natural gas rigs that were drilling a year ago, but still just 6.6% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008....however, the so-called "miscellaneous" rig that had been drilling in Lake County, California was pulled out this week, leaving just a horizontal rig in the Permian basin in Midland county Texas that was classified as 'miscellaneous' this week, compared to the "miscellaneous" rig count of two a year ago..

The Gulf of Mexico rig count was unchanged at 13 rigs this week, with 12 of those rigs now drilling for oil in Louisiana's offshore waters and 1 rig continuing to drill for oil in Alaminos Canyon offshore from Texas...that was 2 fewer Gulf of Mexico rigs than the 1​5 rigs drilling in the Gulf a year ago, when all 15 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...meanwhile, in addition to those rigs offshore, a rig continues to drill through an inland lake in St Mary parish Louisiana, matching the "inland waters" rig count of one a year ago...

The count of active horizontal drilling rigs was up by 10 to 408 horizontal rigs this week, which was also up by 70 rigs from the 338 horizontal rigs that were in use in the US on May 8th 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 unchanged at 23 directional rigs this week, which was​ still​ down by four from the 27 directional rigs that were operating during the same week a year ago....at the same time, the vertical rig count was down by 2 to 17 vertical rigs this week, but those were up by 8 from the 9 vertical rigs that were in use on May 8th 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 May 7th, the second column shows the change in the number of working rigs between last week's count (April 30th) and this week's (May 7th) count, the third column shows last week's April 30th 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 8th of May, 2020..    

May 7th 2021 rig count summary

​from the tables above, it's not entirely obvious where that 7 rig increase in natural gas rigs was this week....checking first for the details on the Permian basin in Texas from the Rigs by State file at Baker Hughes, we find that that three​ oil​ rigs were added in Texas Oil District 8, which is the core Permian Delaware, that two​ oil​ rigs added in Texas Oil District 7C, which encompasses the southern counties of the Permian Midland, and that another​ oil​ rig was added in Texas Oil District 8A, which includes the northern counties of the Permian Midland, while the last​ oil​ rig remaining in Texas Oil District 7B, which includes furthest east counties of the Permian Midland, was pulled out, thus accounting for the national Permian basin​ 5 rig​ increase...elsewhere in Texas, we had a natural gas rig added in Texas Oil District 1, and two oil rigs pulled out of Texas Oil District 2, all of which had to be Eagle Ford rigs, to account for both the increase of one gas rig and the loss of two oil rigs in the Eagle Ford, which now has 31 oil rigs and two gas rigs​ deployed​...in addition, a natural gas rig was added in Texas Oil District 6, accounting for one of the Haynesville shale rigs seen above, whiile the other three Haynesville rigs​ ​were added in northern Louisiana...thus to get to our 7 natural gas rigs, we have the 4 that were added in the Haynesville shale, the gas rig that was added in the Eagle Ford, the​ gas​ rig that was added in Pennsylvania's Marcellus, and a natural gas rig that was added in a basin that Baker Hughes doesn't track, which could have been in Utah, since that's the only obvious rig addition we haven't accounted for yet... 

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note: there’s more here...

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