Masters Of War

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

Monday, May 3, 2021

refinery utilization rate highest in 57 weeks; gasoline output at a 58 week high; imports of distillates at a 35 week low

oil prices moved higher this week as strong economic reports and rising product demand overshadowed the Covid disaster unfolding in India....after falling 1.6% to $62.14 a barrel last week on rising global Covid cases and on a surprise increase in US crude supplies, the contract price of US light sweet crude for June delivery opened lower and fell over 2% early Monday amid soaring coronavirus cases in major oil importer India but recovered to settle just 23 cents lower at $61.91 a barrel on Monday, as other news, particularly from the U.S., was looking a lot better, lending to traders' optimism...oil prices continued higher on Tuesday after OPEC and its allies projected a strong recovery in global oil demand this year, and finished with a $1.03 gain at $62.94 a barrel even after OPEC, Russia and other producers agreed to stick to plans to raise output slightly starting May 1...oil prices dipped early Wednesday after the API reported a surprise build of crude supplies, but then surged to the highest level in over a month as declining oil product supplies and signs of stronger demand buttressed expectations for a revival in global consumption, and settled 92 cents, or 1.5% higher, at $63.86 per barrel....oil prices jumped to a six week high with the release of the US GDP report on Thursday morning, and held most of the early gains to end $1.15 higher at $65.01 a barrel, even as India continued to struggle with another rise in Covid-19 cases...oil prices dropped early on Friday as profit-taking and a strengthening U.S. dollar brought a end to the week’s rally, with oil closing $1.43 to $63.58 a barrel as investors unloaded positions after weak Japanese crude import data and on concern about fuel demand in India, but still ending with a gain of 2.3% on the week and of more than 7% for the month...

natural gas prices also finished higher this week, on record exports and on declining gas field output... after rising 1.9% to $2.730 per mmBTU last week on an outbreak of record cold east of the Rockies, the contract price of natural gas for May delivery opened lower on Monday but gradually reversed course to close 6.0 cents higher at $2.790 per mmBTU, as continuously strong export demand pushed prices into positive territory...prices then jumped 8.3 cents to a nine-week high of 2.873 per mmBTU on record exports and lower gas output on Tuesday, and then rose another 5.2 cents on Wednesday as traders speculated that the much colder-than-usual weather last week might have led utilities to have pulled gas from storage, as trading in the May contract expired with May natural gas priced at $2.925 per mmBTU...with natural gas price quotes now referencing the contract price of natural gas for June delivery, prices reversed on Thursday and fell 4.9 cents to $2.911 per mmBTU, after EIA storage data showed natural gas inventories grew more than expected....natural gas prices then recovered 2.0 cents on Friday settle at $2.911 per mmBTU on forecasts for cooler weather over the next two weeks+, record exports and a small decline in output, and hence managed to end the week more than 7% higher, while the May contract, which had closed last week at $2.818 per mmBTU, posted a 4.0% gain...

the natural gas storage report from the EIA for the week ending April 23rd indicated that the amount of natural gas held in underground storage in the US rose by 15 billion cubic feet to 1,898 billion cubic feet by the end of the week, which left our gas supplies 302 billion cubic feet, or 13.7% below the 2,200 billion cubic feet that were in storage on April 23rd of last year, and 40 billion cubic feet, or 2.1% below the five-year average of 1,938 billion cubic feet of natural gas that have been in storage as of the 23rd of April in recent years....the 15 billion cubic feet that were added to US natural gas storage this week was more than the average forecast of a 9 billion cubic foot addition from an S&P Global Platts survey of analysts, but measured well below the average addition of 67 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 66 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 23rd showed that because of a big increase in our oil imports, we had surplus oil to add to our stored commercial crude supplies for the seventh time in ten weeks and for the 15th time in the past fort​y​ weeks....our imports of crude oil rose by an average of 1,211,000 barrels per day to an average of 6,616,000 barrels per day, after falling by an average of 448,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 7,000 barrels per day to an average of 2,541,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,075,000 barrels of per day during the week ending April 23rd, 1,218,000 more barrels per day than the net of our imports minus our exports during the prior week...over the same period, the production of crude oil from US wells was reportedly 100,000 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 14,975,000 barrels per day during this reporting week... 

meanwhile, US oil refineries reported they were processing 15,018,000 barrels of crude per day during the week ending April 23rd, 253,000 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 194,000 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 a rounded 150,000 barrels per day more than what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (-150,000) 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 +887,000 barrels per day, there was a 1,038,000 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 6,034,000 barrels per day last week, which is now 10.7% more than the 5,448,000 barrel per day average that we were importing over the same four-week Covid impacted period last year... the 194,000 barrel per day net withdrawal from our crude inventories included a 207,000 barrel per day withdrawal from our Strategic Petroleum Reserve, space in which has been leased for commerical purposes, which was slighly offset by a 13,000 barrel per day addition to our commercially available stocks of crude oil....this week's crude oil production was reported to be 100,000 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 100,000 barrels per day lower at 10,500,000 barrels per day, while a 3,000 barrel per day decrease in Alaska's oil production to 442,000 barrels per day did not impact the rounded national total....our prepandemic 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 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 85.4% of their capacity while using those 15,018,000 barrels of crude per day during the week ending April 23rd, up from 85.0% the prior week, and the highest refinery utilization rate in 57 weeks, reflecting the refinery utilization level during the last week before the ​pandemic related slowdown...while the 15,018,000 barrels per day of oil that were refined this week were 17.7% higher than the 12,761,000 barrels of crude that were being processed daily during the week ending April 24th of last year, they were still 8.7% below the 16,446,000 barrels of crude that were being processed daily during the week ending April 26th, 2019, when US refineries were operating at a still low 89.2% of capacity...

with this week's increase in the amount of oil being refined, the gasoline output from our refineries increased by 243,000 barrels per day to a fifty-eight week high of 9,629,000 barrels per day during the week ending April 23rd, after our gasoline output had decreased by 229,000 barrels per day over the prior week...while this week's gasoline production was 43.0% higher than the 6,735,000 barrels of gasoline that were being produced daily over the same week of last year, it was still 3.5% lower than the March 13th 2020 pre-pandemic high of 9,974,000 barrels per day, and 3.0% below the gasoline production of 9,927,000 barrels per day during the week ending April 26th, 2019....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) increased by 71,000 barrels per day to 4,626,000 barrels per day, after our distillates output had decreased by 89,000 barrels per day over the prior week... but since the onset of the pandemic ​last year ​didn't appear to impact distillates' production, this week's distillates output was still 7.1% lower than the 4,982,000 barrels of distillates that were being produced daily during the week ending April 24th, 2020...

with the increase in our gasoline production, our supply of gasoline in storage at the end of the week increased for the eighteenth time in twenty-four weeks, and for 22d time in 41 weeks, but only rose by 92,000 barrels to 235,074,000 barrels during the week ending April 23rd, after our gasoline inventories had increased by 85,000 barrels over the prior week...our gasoline supplies managed to increase this week because the amount of gasoline supplied to US users decreased by 227,000 barrels per day to 8,877,000 barrels per day while our imports of gasoline fell by 98,000 barrels per day to 1,021,000 barrels per day, and while our exports of gasoline fell by 73,000 barrels per day to 604,000 barrels per day....but even after four straight inventory increases, our gasoline supplies still were 9.4% lower than last April 24th's gasoline inventories of 259,565,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year... 

meanwhile, even with the increase in our distillates production, our supplies of distillate fuels decreased for the 9th time in 19 weeks and for the 23rd time in thirty-five weeks, falling by 3,342,000 barrels to 139,049,000 barrels during the week ending April 23rd, after our distillates supplies had decreased by 1,073,000 barrels during the prior week....our distillates supplies fell by more this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 476,000 barrels per day to 4,330.000 barrels per day, while our imports of distillates fell by 27,000 barrels per day to a 32 week low of 135,000 barrels per day, and while our exports of distillates fell by 108,000 barrels per day to 908,000 barrels per day....after this week's inventory decrease, our distillate supplies at the end of the week were 2.1% below the 141,972,000 barrels of distillates that we had in storage on April 24th, 2020, and just about at the five year average of distillates stocks for this time of the year...

finally, with the big jump in our oil imports, our commercial supplies of crude oil in storage rose for the 11th time in the past twenty-four weeks and for the 26th time in the past year, but only by 90,000 barrels, from 493,017,000 barrels on April 16th to 493,107,000 barrels on April 23rd...after this week's nominal increase, our commercial crude oil inventories were close to the most recent five-year average of crude oil supplies for this time of year, and at about 42% above the average of our crude oil stocks as of the fourth 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 ​Covid​ lockdowns of last spring, our commercial crude oil supplies as of April 23rd are now 6.5% less than the 527,631,000 barrels of oil we had in commercial storage on April 24th of 2020, but still 4.8% more than the 470,567,000 barrels of oil that we had in storage on April 26th of 2019, and also 13.1% more than the 435,955,000 barrels of oil we had in commercial storage on April 27th of 2018...     

This Week's Rig Count

The US rig count rose for the 29th time over the past 33 weeks during the week ending April 30th, but is still down by 44.5% 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 440 rigs this past week, which was also up by 32 rigs from the pandemic hit 408 rigs that were in use as of the May 1st report of 2020, but was still 1,489 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 down by 1 to 342 oil rigs this week, after falling by 1 the prior week, still leaving us with 17 more oil rigs than were running a year ago, but less than 21% 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 2 to 96 natural gas rigs, which was also up by 15 natural gas rigs from the 81 natural gas rigs that were drilling a year ago, but still just 6.0% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008...in addition, a rig started drilling in  the Permian basin in Midland county Texas that was classified as 'miscellaneous' this week, while a "miscellaneous" rig also continued to drill in Lake County, California, thus matching the "miscellaneous" rig count of two a year ago..

The Gulf of Mexico rig count was up by 2 to 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 3 fewer Gulf of Mexico rigs than the 13 rigs drilling in the Gulf a year ago, when all 16 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...​however, ​in addition to those ​rigs ​offshore, a rig continued to drill through an inland lake in St Mary parish Louisiana, while a year ago there were no rigs deployed on inland waters...

The count of active horizontal drilling rigs was up by 1 to 398 horizontal rigs this week, which was also up by 24 rigs from the 374 horizontal rigs that were in use in the US on May 1st of last year, and less than a third of the record of 1372 horizontal rigs that were deployed on November 21st of 2014....at the same time, the directional rig count was up by 4 rigs to 23  directional rigs this week, ​which was ​the same number of  directional rigs that were operating during the same week a year ago....on the other hand, the vertical rig count was down by 4 to 19 vertical rigs this week, but those were up by 8 from the 11 vertical rigs that were in use on May 1st 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 30th, the second column shows the change in the number of working rigs between last week's count (April 23rd) and this week's (April 30th) count, the third column shows last week's April 23rd 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 1st  of May, 2020..    

April 30 2021 rig count summary

as you can see, there were again just a few changes this week, with all of those in the South....checking first for the details on the Permian basin in Texas from the Rigs by State file at Baker Hughes, we find that that four rigs were pulled out of Texas Oil District 8, which is the core Permian Delaware, and that three rigs added in Texas Oil District 7C, ​which ​encompas​ses the southern counties of the Permian Midland..​.​.since the Texas Permian was thus down by 1 this week, that means that the rig that was pulled out of New Mexico must have been targeting the farthest west reaches of the Permian Delaware to accounting for the national loss of two Permian rigs..​.​.elsewhere in Texas, we had single rigs added in Texas Oil District 1, Texas Oil District 3, and Texas Oil District 4, one of which was an oil rig that was added in the Eagle Ford, while the other two had to be natural gas rigs ​targetting a Texas basin not tracked by Baker Hughes, since the two Louisiana additions were oil rigs offshore, and other than the 'miscellaneous' rig addition, all other Permian changes also involved oil rigs..

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