SPR at a 18 yr low, gasoline supplies at 48 mo low, distillate supplies at 23 mo low; total inventories at an 82 month low...

oil prices drop 13% on new Covid variant; Strategic Petroleum Reserve at a 18 year low as US plans further withdrawals; another 48 month low for gasoline inventories; a 23 month low for distillate inventories, and an 82 month low for total inventories...

oil prices fell nearly 10% this week, their fifth decrease in a row, as the discovery of a new Covid variant sent global equity and commodity markets tumbling on Friday....after the contract price for US light sweet crude for December delivery fell 5.6% to $76.10 a barrel last week on heavy profit-taking ahead of potential release of strategic oil reserves, trading in that oil contract expired, and this week's oil trading opened with the contract for US light sweet crude for January priced at $75.75, down 19 cents from last week's close, which then fell more than $1, as expanded C​ovid​-19 restrictions across European Union fueled demand fears...however, oil prices reversed course by midday on speculation that OPEC would respond to any coordinated oil reserves release to settle 81 cents higher at $76.75 a barrel on reports that OPEC+ would adjust plans to raise oil production if large consuming countries released crude from their reserves or if the coronavirus pandemic dampened demand (note that AP incorrectly reported "oil for January delivery rose 65 cents to $76.75 a barrel", referencing the increase from last week's closing price for December oil, and that error was widely repeated elsewhere)...oil prices erased early losses and jumped on Tuesday morning following the announcement from the U.S. that it would make available 50 million barrels of oil from the Strategic Petroleum Reserve and ended $1.75, or 2.5% higher at $78.50 a barrel as traders dismissed Biden's plan to lower prices and instead assessed the risks from the expect OPEC response...oil prices first softened in early trading on Wednesday after industry data from the American Petroleum Institute reported that U.S. commercial crude and gasoline inventories unexpectedly increased last week, but then edged higher following the release of EIA data showing domestic production rose to 11.5 million barrels per day (bpd), offsetting larger-than-expected drawdown from fuel supplies, only to fade near the close and settle 11 cents lower at $78.39 a barrel as the US dollar hit a 17 year high, and as traders awaited OPEC+’s response to the coordinated release of strategic reserves by several countries...oil prices slid more than 1% early Friday after the holiday on concerns that a global supply surplus could swell in the first quarter following that US led coordinated release of crude reserves and then tumbled more than $6 or nearly 9% midday, hitting a two-month low as a new COVID-19 variant spooked traders and added to concerns that a supply surplus could swell in the first quarter and settled down by $10.24, or more than 13% lower at $68.15 a barrel, the largest daily drop since April 2020 (when oil prices had fallen below $0) amid a broad sell-off in global markets, as the new Covid-19 strain sparked fears that demand would slow just as supply was to increase...that Friday selloff left oil prices down more than 10.4% on the week, while the January contract, which had ended last week priced at $75.94, finished almost 10.3% lower...

meanwhile, natural gas prices moved higher for the 11th time in 15 weeks on forecasts for higher domestic heating demand, as global gas​ ​prices also ​pushed higher....after rising 5.6% to $5.065 per mmBTU last week as global prices hit new highs and forecasts turned colder, the contract price of natural gas for December delivery opened more than 3% lower on Monday and tumbled to settle down 27.6 cents near an 11 week low​ of $4.789 per mmBTU,​ on forecasts for milder than normal weather over the next two weeks, near record U.S. output, and a decline in European gas prices....but US prices recovered quickly Tuesday and rallied to close 17.8 cents or 3.7% higher at $4.96.7 per mmBTU as a sharp increase in global gas prices kept demand for US LNG exports near record highs...prices completed the recovery of Monday's losses on Wednesday, rising 10.1 cents or 2% to $5.068  per mmBTU on forecasts for cooler weather and an increase in heating demand over the next two weeks, as the EIA reported the first withdrawal of natural gas from storage of the 2021-22 heating season...natural gas prices then soared 37.9 cents to $5.447 per mmBTU on Friday on forecasts for higher heating demand than was previously expected, thus finishing the week 7.5% higher, the largest weekly jump in almost 2 months, as trading in the December natural gas contract expired....

The EIA's natural gas storage report for the week ending November 19th indicated that the amount of working natural gas held in underground storage in the US fell by 21 billion cubic feet to 3,644 billion cubic feet by the end of the week, the first withdrawal of the season, which left our gas supplies 320 billion cubic feet, or 8.1% below the 3,943 billion cubic feet that were in storage on November 19th of last year, and 58 billion cubic feet, or 1.6% below the five-year average of 3,681 billion cubic feet of natural gas that have been in storage as of the 19th of November ​over the most recent years...the 21 billion cubic foot withdrawal from US natural gas working storage this week was just below the average forecast for a 23 billion cubic foot withdrawal from a S&P Global Platts survey of analysts, but it was almost double the 11 billion cubic feet ​​that were pulled from natural gas storage during the corresponding week of 2020, while it was less than half of the average withdrawal of 44 billion cubic feet of natural gas that have typically been pulled out 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 November 19th showed that a big drop in our oil exports, a modest increase in our oil imports, a modest withdrawal of oil from our Strategic Petroleum Reserve and incrementally higher oilfield production together meant we had a little surplus oil to add to our stored commercial crude supplies for the seventh time in nine weeks and for the twelfth time in the past thirty-four weeks….our imports of crude oil rose by an average of 245,000 barrels per day to an average of 6,436,000 barrels per day, after rising by an average of 83,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 1,021,000 barrels per day to an average of 2,605,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 3,831,000 barrels of per day during the week ending November 19th, 1,266,000 more barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude oil from US wells was reportedly 100,000 barrels per day higher at 11,500,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 15,331,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,640,000 barrels of crude per day during the week ending November 19th, an average of 243,000 more barrels per day than the amount of oil they processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 89,000 barrels of oil per day were being pulled out 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 220,000 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 plunked a (+220,000) 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 balance sheet fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission of that magnitude in this week’s oil supply & demand figures that we have just transcribed...and since last week’s EIA fudge factor was at (+668,000) barrels per day, that means there was a 448,000 barrel per day difference in the EIA's crude oil balance sheet error from a week ago, and hence the week over week supply and demand changes indicated by this week's report are fairly useless...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 oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably 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)….

This week's 89,000 barrel per day net decrease in our crude oil inventories came as 145,000 barrels per day were added to our commercially available stocks of crude oil while 235,000 barrels per day of oil were pulled out of our Strategic Petroleum Reserve, apparently still part of an emergency loan of oil to Exxon in the wake of hurricane Ida...including the 16,797,000 barrels per day drawdown from the Strategic Petroleum Reserve under that emergency program, a total of 51,642,000 barrels per day have been removed from the Strategic Petroleum Reserve for a series of other "emergencies" over the past 16 months, and as a result the amount of oil in our Strategic Petroleum Reserve has fallen to an 18 year low of 604,505,000 barrels per day, as repeated tapping of our emergency supplies for political expediency or to “pay for” other programs have already drained those supplies over the past dozen years...with the BIden administration's announcement this week that another 50 million barrels of oil will be released to incentivize continued use of American gas guzzlers, we will now initiate weekly coverage of the SPR storage status on this blog...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,227,000 barrels per day last week, which was 18.5% more than the 5,253,000 barrel per day average that we were importing over the same four-week period last year….this week’s crude oil production was reported to be 100,000 barrels per day higher at 11,500,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,100,000 barrels per day, while a 5,000 barrel per day increase in Alaska’s oil production to 449,000 barrels per day had no impact on the reported rounded national production total….US crude oil production had hit a pre-pandemic record high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was still 12.2% below that of our pre-pandemic production peak, but 36.4% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016... 

US oil refineries were operating at 88.6% of their capacity while using those 15,640,000 barrels of crude per day during the week ending November 19th, up from 87.9% of capacity the prior week, but still a bit below normal utilization for late-autumn refinery operations…the 15,640,000 barrels per day of oil that were refined this week were 9.7% more barrels than the 14,263,000 barrels of crude that were being processed daily during the pandemic impacted week ending November 20th of last year, but 4.4% less than the 16,334,000 barrels of crude that were being processed daily during the week ending November 22nd, 2019, when US refineries were operating at what was then also a bit below normal 89.3% of capacity...

With the increase in the amount of oil being refined this week, the gasoline output from our refineries was also higher, increasing by 177,000 barrels per day to 10,099,000 barrels per day during the week ending November 19th, after our gasoline output had decreased by 132,000 barrels per day over the prior week.…this week’s gasoline production was also 14.1% more than the 8,850,000 barrels of gasoline that were being produced daily over the same week of last year, and a bit more than the gasoline production of 10,065,000 barrels per day during the week ending November 22nd, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 58,000 barrels per day to 4,784,000 barrels per day, after our distillates output had decreased by 26,000 barrels per day over the prior week…despite the recent decreases, our distillates output was 4.3% more than the 4,587,000 barrels of distillates that were being produced daily during the week ending November 20th, 2020, but 5.7% less than the 5,075,000 barrels of distillates that were being produced daily during the week ending November 22nd, 2019..

Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week decreased for the tenth time in thirteen weeks, and for the nineteenth time in thirty-one weeks, falling by 603,000 barrels to another 48 month low of 211,393,000 barrels during the week ending November 19th, after our gasoline inventories had decreased by 707,000 barrels to a 48 month low over the prior week...our gasoline supplies decreased again this week because the amount of gasoline supplied to US users increased by 93,000 barrels per day to 9,334,000 barrels per day, and because our imports of gasoline fell by 340,000 barrels per day to 843,000 barrels per day, while our exports of gasoline fell by 223,000 barrels per day to 608,000 barrels per day…after this week’s inventory decrease, our gasoline supplies were 8.1% lower than last November 20th's gasoline inventories of 230,147,000 barrels, and about 6% 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 decreased for the eleventh time in thirteen weeks and for the 23nd time in 33 weeks, falling by 1,968,000 barrels to a 23 month low of 121,717,000 barrels during the week ending November 19th, after our distillates supplies had decreased by 824,000 barrels to a 19 month low 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 41,000 barrels per day to 4,350,000 barrels per day, and because our exports of distillates rose by 151,000 barrels per day to 1,007,000 barrels per day while our imports of distillates rose by 93,000 barrels per day to 332,000 barrels per day....and after twenty-three inventory decreases over the past thirty-three weeks, our distillate supplies at the end of the week were 14.7% below the 142,632,000 barrels of distillates that we had in storage on November 13th, 2020, and about 8% below the five year average of distillates stocks for this time of the year…

Meanwhile, with this week's drop in our oil exports, the increase in our oil imports, and the withdrawal of oil from our Strategic Petroleum Reserve more than offsetting the increase in refinery demand, our commercial supplies of crude oil in storage rose for the tenth time in the past twenty-six weeks and for the 19th time in the past year, increasing by 1,017,000 barrels over the week, from 433,003,000 barrels on November 12th to 434,020,000 barrels on November 19th, after our commercial crude supplies had decreased by 2,101,000 barrels over the prior week…after this week’s increase, our commercial crude oil inventories remained around 7% below the most recent five-year average of crude oil supplies for this time of year, but were still about 27% above the average of our crude oil stocks as of the third weekend of November over the 5 years at the beginning of the past 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 and remained elevated for most of the year after that, our commercial crude oil supplies as of this November 19th were 11.2% less than the 488,721,000 barrels of oil we had in commercial storage on November 20th of 2020, and are now 4.0% less than the 451,952,000 barrels of oil that we had in storage on November 22nd of 2019, and 3.7% less than the 450,485,000 barrels of oil we had in commercial storage on November 23rd of 2018…

Finally, with our inventory of crude oil and our supplies of all products made from oil all at or near multi year lows, we are continuing to track the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that total oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, fell by 7,620,000 barrels this week, from 1,830,012,000 barrels on November 12th to 1,822,392,000 barrels on November 19th, which is our lowest level of total US inventories since January 23rd, 2015, and are therefore at a 82 month low...

This Week's Rig Count

The number of drilling rigs active in the US increased for the 53rd time during the past 62 weeks with this week's report, which only covers the five days ending Wednesday, November 24th, due to the Thanksgiving holiday....Baker Hughes reported that the total count of rotary rigs running in the US increased by six to 569 rigs over that period, which was also 249 more rigs than the pandemic hit 310 rigs that were in use as of the November 25th report of 2020, but was also still 1,360 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global oil market in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 6 to 467 oil rigs during this period, after they had increased by 7 oil rigs the prior week, and there are now 226 more oil rigs active now than were running a year ago, even as they still amount to just 29.0% of the high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 102 natural gas rigs, which was still up by 25 natural gas rigs from the 77 natural gas rigs that were drilling during the same week a year ago, but still only 6.4% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….note that last year's rig count also included 3 rigs that Baker Hughes had classified as "miscellaneous', while there are no such "miscellaneous' rigs deployed this week...

The Gulf of Mexico rig count was unchanged at fifteen rigs this week, with thirteen of this week's Gulf rigs drilling for oil in Louisiana waters and two more drilling for oil in Alaminos Canyon, offshore from Texas....the Gulf rig count is still up by three rigs from the twelve rigs in the Gulf a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil in Texas waters…since there is now no drilling off our other coasts, nor was there a year ago, the Gulf rig count is equal to the national offshore totals..

In addition to those rigs offshore, we continue to have two water based rigs drilling inland; one is a directional rig targeting oil at a depth of over 15,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, and the other is drilling for oil in the Galveston Bay area, and hence the inland waters rig count of two is up from one from a year ago..

The count of active horizontal drilling rigs was up by 7 to 513 horizontal rigs this week, which was 81.3% more than the 283 horizontal rigs that were in use in the US on November 25th of last year, but was ​62.7%​ less than the record 1,374 horizontal rigs that were deployed on November 21st of 2014..…on the other hand, the directional rig count was down by one to 34 directional rigs this week, but those were still up by 12 from the 22 directional rigs that were operating during the same week a year ago….meanwhile, the vertical rig count was unchanged at 22 vertical rigs this week, and those were up by 7 from the 15 vertical rigs that were in use on November 25th 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 November 24th, the second column shows the change in the number of working rigs between last week’s count (November 19th) and this week’s (November 24th) count, the third column shows last week’s November 19th 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 25th of November, 2020...

as you can see, this week's change was driven by the four rig increase in North Dakota, which were all oil directed rigs targeting the Bakken shale in the Williston basin...however, the Williston count was only up by 3 because a Williston rig was removed from Montana at the same time...next, checking the Texas Permian basin in the Rigs by State file at Baker Hughes, we find that two rigs were added in Texas Oil District 8, which is the core Permian Delaware, and that rig counts in the other Texas Permian districts were unchanged, thus indicating the overall two rig increase in the Texas Permian, and matching the national count shown... elsewhere in Texas, we find that a rig was added in Texas Oil District 5, but that a rig was pulled out of Texas Oil District 6 at the same time...both of those rigs could have been targeting the Haynesville​ shale​, since that basin shows an increase of one oil rig and a decrease of two natural gas rigs, with no obvious activity in the Haynesville shale region of Louisiana...whatever the case, the natural gas rig count was still unchanged this week because a natural gas rig was added to the Marcellus in Pennsylvania, and another natural gas rig was added to a basin that Baker Hughes doesn't track...

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note: there’s more here…

gasoline supplies at a 48 mo low, distillate supplies at a 19 mo low; total inventories at a 79 mo low; DUC backlog at 5.9 months as completions slip…

gasoline supplies at a 48 month low, distillate supplies at a 19 month low; total inventories of oil and all oil products at a 79 month low; DUC backlog at 5.9 months as completions slip; record low DUCs in Appalachia, the Bakken, the Eagle Ford, and the Niobrara chalk..

US oil prices fell for the fourth straight week this week, and have now retraced almost a third of their two month rally to a seven year high on October 26th...after falling 0.6% to $80.79 a barrel last week on forecasts of lower demand and as Biden threatened OPEC, the contract price for US light sweet crude for December delivery opened lower and fell more than 1.5% in early trading on Monday, as traders were spooked by a surge in Covid-19 infections across Europe that had prompted several governments in the region to bring back quarantine restrictions, but recovered to settle 9 cents higher at $80.88 a barrel, even as Brent, the international benchmark crude, lost 12 cents,as traders questioned whether crude supplies would increase and whether demand would be pressured by the recent surge in prices or rising COVID-19 cases...oil prices then pushed higher in early trading on Tuesday after the International Energy Agency (IEA) failed to lower its 2021 global oil demand outlook, projecting that "bourgeoning gasoline and jet fuel consumption underpinned by the reopening of international air travel would offset renewed quarantine measures", but turned lower to settle down 12 cents at $80.76 a barrel. as prospects of tight inventories worldwide were offset by forecasts of a production increase in coming months and concerns over rising coronavirus cases in Europe...oil prices fell right out of the gate on Wednesday on fears the US and China would jointly release oil stores from the strategic reserves of the two countries, with losses deepening by late morning despite an EIA report showing U.S. commercial crude oil inventories had unexpectedly decreased and that gasoline supplies had dropped, and settled $2.40 lower at $78.36 a barrel after the IEA and OPEC both warned of impending oversupply, and as COVID-19 cases in Europe increased the downside risks to demand, and as a Biden request that the Federal Trade Commission investigate oil companies for price manipulation further soured sentiment...however, oil prices rallied early Thursday as prices below $80 lured bargain hunters back into the market and drove December crude 65 cents higher to $79.01 a barrel, as traders assessed the potential impact of a coordinated release from OECD petroleum oil reserves, with the Biden administration reportedly calling for a joint action among oil-consuming countries to lower energy prices ahead of the winter months....but oil prices plunged by 3% again early on Friday as Europe dealt with rising Covid cases by returning to lockdowns and other restrictions, which traders feared would weigh on oil demand, and then tumbled again after a brief midday rally sputtered to finish $2.91 lower at $76.10 a barrel, as trading in December crude expired at a 7 week low, with that contract falling 5.8% this week alone...

natural gas prices, on the other hand, moved higher for the 10th time in 14 weeks, as global prices hit new highs and forecasts turned colder....after falling 13.1% to $4.791 per mmBTU last week on falling prices in Europe and on forecasts for mild weather heading into winter, the contract price of natural gas for December delivery opened more than 2% higher on Monday on forecasts for colder weather and higher heating demand over the next two weeks than had been expected and continued rising to settle 22.6 cents higher at $5.017 per mmBTU on lower domestic output and on strong demand for exports...gas prices continued rising Tuesday, adding 16.0 cents to settle at $5.177 per mmBTU, on soaring prices in Europe and strong demand for LNG, after a German regulator suspended its certification of Russia’s recently completed Nord Stream 2 pipeline...but US natural gas prices gave up most of the week's gain on Wednesday, despite record gas prices in Asia and a 27% jump in European prices over the prior three days, falling 36.1 cents or 7% to $4.816 per mmBTU, on an ongoing increase in natural gas production and on forecasts for a decline in heating demand over the coming week...natural gas prices edged back up 8.6 cents to $4.902 about 2% on Thursday as LNG exports climbed to near record highs as the sixth liquefaction train at Cheniere's Sabine Pass export plant in Louisiana continued to ramp up, and then rose 16.3 cents more to $5.065 on Friday, lifted by ongoing robust levels of U.S. exports and expectations for stronger weather-driven demand, to finish 5.7% higher on the week...

The EIA's natural gas storage report for the week ending November 12th indicated that the amount of working natural gas held in underground storage in the US rose by 26 billion cubic feet to 3,644 billion cubic feet by the end of the week, which still left our gas supplies 310 billion cubic feet, or 7.8% below the 3,954 billion cubic feet that were in storage on November 12th of last year, and 81 billion cubic feet, or 2.2% below the five-year average of 3,725 billion cubic feet of natural gas that have been in storage as of the 12th of November in recent years...the 26 billion cubic foot increase in US natural gas in working storage this week was more than the average forecast for a 22 billion cubic foot addition from a S&P Global Platts survey of analysts, and it was close to the 28 billion cubic feet that were added to natural gas storage during the corresponding week of 2020, but it contrasts with the average withdrawal of 12 billion cubic feet of natural gas that have typically been pulled out 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 November 12th showed that a big jump in our oil exports and a modest decrease in our oil prouduction meant we had to pull oll out out of our stored commercial crude supplies for the second time in eight weeks and for the twenty-second time in the past thirty-three weeks….our imports of crude oil rose by an average of 83,000 barrels per day to an average of 6,191,000 barrels per day, after falling by an average of 63,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 573,000 barrels per day to an average of 3,626,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 2,565,000 barrels of per day during the week ending November 12th, 490,000 fewer barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude oil from US wells was reportedly 100,000 barrels per day lower at 11,400,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 13,965,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,397,000 barrels of crude per day during the week ending November 12th, an average of 32,000 more barrels per day than the amount of oil they processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 764,000 barrels of oil per day were being pulled out 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 668,000 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 plunked a (+668,000) 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 balance sheet fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission 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 oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably 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 6,181,000 barrels per day last week, which was 15.3% more than the 5,361,000 barrel per day average that we were importing over the same four-week period last year…the 764,000 barrel per day net decrease in our crude inventories came as 300,000 barrels per day were pulled out of our commercially available stocks of crude oil and 464,000 barrels per day of oil were pulled out of our Strategic Petroleum Reserve, apparently still part of an emergency loan of oil to Exxon in the wake of hurricane Ida….this week’s crude oil production was reported to be 100,000 barrels per day lower at 11,400,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,000,000 barrels per day, while a 1,000 barrel per day increase in Alaska’s oil production to 443,000 barrels per day had no impact on the reported rounded national production total….US crude oil production had hit a pre-pandemic record high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 13.0% below that of our pre-pandemic production peak, but 35.3% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016...

US oil refineries were operating at 87.9 of their capacity while using those 15,397,000 barrels of crude per day during the week ending November 12th, up from  86.7% of capacity the prior week, but still a little below normal utilization for mid-autumn refinery operations…the 15,397,000 barrels per day of oil that were refined this week were 11.4% more barrels than the 13,841,000 barrels of crude that were being processed daily during the pandemic impacted week ending November 13th of last year, but 6.3% less than the 16,435,000 barrels of crude that were being processed daily during the week ending November 15th, 2019, when US refineries were operating at what was then also a bit below normal 89.5% of capacity...

Despite the increase in the amount of oil being refined this week, the gasoline output from our refineries was somewhat lower, decreasing by 132,000 barrels per day to 9,922,000 barrels per day during the week ending November 12th, after our gasoline output had decreased by 122,000 barrels per day over the prior week.…this week’s gasoline production was still 9.4% more than the 9,064,000 barrels of gasoline that were being produced daily over the same week of last year, but 1.3% less than the gasoline production of 10,053,000 barrels per day during the week ending November 15th, 2019….similarly, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 26,000 barrels per day to 4,842,000 barrels per day, after our distillates output had increased by 35,000 barrels per day over the prior week…despite the week's decrease, our distillates output was 13.3% more than the 4,275,000 barrels of distillates that were being produced daily during the week ending November 13th, 2020, but 5.5% less than the 5,124,000 barrels of distillates that were being produced daily during the week ending November 15th, 2019..

With the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week decreased for the ninth time in twelve weeks, and for the eighteenth time in thirty weeks, falling by 707,000 barrels to a 48 month low of 211,996,000 barrels during the week ending November 12th, after our gasoline inventories had decreased by 1.555,000 barrels over the prior week...our gasoline supplies decreased by less this week because the amount of gasoline supplied to US users fell by 18,000 barrels per day to 9,241,000 barrels per day, and because our imports of gasoline rose by 236,000 barrels per day to 823,000 barrels per day, while our exports of gasoline fell by 2,000 barrels per day to 831,000 barrels per day…after this week’s inventory decrease, our gasoline supplies were 7.0% lower than last November 13th's gasoline inventories of 227,967,000 barrels, and about 4% 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 decreased for the tenth time in twelve weeks and for the 22nd time in 32 weeks, falling by 824,000 barrels to a 19 month low of 123,685,000 barrels during the week ending November 5th, after our distillates supplies had decreased by 2,613,000 barrels during the prior week….our distillates supplies fell by less this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 70,000 barrels per day to 4,350,000 barrels per day, because our exports of distillates fell by 390,000 barrels per day to 849,000 barrels per day while our imports of distillates fell by 39,000 barrels per day to 239,000 barrels per day....but after twenty-two inventory decreases over the past thirty-two weeks, our distillate supplies at the end of the week were 14.2% below the 144,073,000 barrels of distillates that we had in storage on November 13th, 2020, and about 5% below the five year average of distillates stocks for this time of the year…

Meanwhile, with this week's big increase in our oil exports, our commercial supplies of crude oil in storage fell for the sixteenth time in the past twenty-five weeks and for the 32nd time in the past year, decreasing by 2,101,000 barrels over the week, from 435,104,000 barrels on November 5th to 433,003,000 barrels on November 12th, after our commercial crude supplies had increased by 1,002,000 barrels over the prior week…after this week’s decrease, our commercial crude oil inventories remained around 7% below the most recent five-year average of crude oil supplies for this time of year, but were still almost 27% above the average of our crude oil stocks as of the first weekend of November over the 5 years at the beginning of the past 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 and remained elevated for most of the year after that, our commercial crude oil supplies as of this November 12th were 11.5% less than the 489,475,000 barrels of oil we had in commercial storage on November 13th of 2020, and are now 3.9% less than the 450,380,000 barrels of oil that we had in storage on November 15th of 2019, and 3.1% less than the 446,908,000 barrels of oil we had in commercial storage on November 16th of 2018…

Finally, with our inventory of crude oil and our supplies of all products made from oil at multi year lows, we are continuing to track the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that total oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, fell by 12,121,000 barrels this week, from 1,842,133,000 barrels on November 5th to 1,830,012,000 barrels on November 12th, which is our lowest level of total US inventories since February 13th, 2015, and are therefore at a 79 month low...

This Week's Rig Count

The number of drilling rigs active in the US increased for the 52nd time out of the past 61 weeks during the week ending November 19th, but they remained 29.0% below the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US increased by seven to 563 rigs this past week, which was also 253 more rigs than the pandemic hit 310 rigs that were in use as of the November 13th report of 2020, but was also still 1,366 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global oil market in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 7 to 461 oil rigs this week, after they had increased by 4 oil rigs the prior week, and there are now 230 more oil rigs active now than were running a year ago, even as they still amount to just 28.7% of the high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 102 natural gas rigs, which was still up by 26 natural gas rigs from the 76 natural gas rigs that were drilling during the same week a year ago, but still only 6.4% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….last year's rig count also included 3 rigs that Baker Hughes had classified as "miscellaneous', while there are no such "miscellaneous' rigs deployed this week...

The Gulf of Mexico rig count was unchanged at fifteen rigs this week, but up from the 14 rigs that were deployed in the Gulf the week before Hurricane Ida approached, with thirteen of this week's Gulf rigs drilling for oil in Louisiana waters and two more drilling for oil in Alaminos Canyon, offshore from Texas....the Gulf rig count is now up by three rigs from the twelve rigs in the Gulf a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil in Texas waters…since there is now no drilling off our other coasts, nor was there a year ago, the Gulf rig count is equal to the national offshore totals..

In addition to those rigs offshore, we continue to have two water based rigs drilling inland; one is a directional rig targeting oil at a depth of over 15,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, and the other is drilling for oil in the Galveston Bay area, and hence the inland waters rig count of two is up from one from a year ago..

The count of active horizontal drilling rigs was up by 7 to 508 horizontal rigs this week, which was 86.8% more than the 272 horizontal rigs that were in use in the US on November 20th of last year, but was just 37% of the record 1,374 horizontal rigs that were deployed on November 21st of 2014..…on the other hand, the directional rig count was unchanged at 35 directional rigs this week, and those were up by 15 from the 20 directional rigs that were operating during the same week a year ago….meanwhile, the vertical rig count was also unchanged at 22 vertical rigs this week, and those were up by 4 from the 18 vertical rigs that were in use on November 20th 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 November 19th, the second column shows the change in the number of working rigs between last week’s count (November 12th) and this week’s (November 19th) count, the third column shows last week’s November 12th 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 20th of November, 2020...

once again, this week's change was driven by the seven rig increase in Texas, so checking Texas first in the Rigs by State file at Baker Hughes, we find that four rigs were added in Texas Oil District 8, which is the core Permian Delaware, and that rig counts in the other Texas Permian districts were unchanged, thus indicating a overall four rig increase in the Texas Permian...since the national Permian rig count was up by six, that means that both of the rigs that were added in New Mexico were set up to drill in the western Permian Delaware...elsewhere in Texas, we find that two rigs were pulled out of Texas Oil District 1, but that a rig was added in Texas Oil District 2, and three more rigs were added in Texas Oil District 4...since all those districts include part of the Eagle Ford shale, some combination of the changes shown there account for the decrease of one oil rig and the increase of two natural gas rigs in that basin, which now has 37 oil rigs and 5 natural gas rigs deployed....meanwhile, yet another rig was added in Texas Oil District 6, which accounts for the natural gas rig increase in the Haynesville shale, since the rig count in the Haynesville in adjacent Louisiana was unchanged...elsewhere, there was an oil rig removed from the DJ Niobrara chalk, which had been drilling in either Colorado or Wyoming, but since the rig counts in both of those states were unchanged, that means that an oil rig was concurrently added in whichever state the Niobrara rig was pulled from, in a basin not covered by Baker Hughes...meanwhile, for natural gas rigs, which ended the week unchanged, we have the two rigs added in the Eagle Ford, another added in the Haynesville shale, also in Texas, and one more in West Virginia, in the Marcellus...at the same time, two natural gas rigs were pulled out of Ohio's Utica shale, another was pulled out of the Permian basin, which saw a 7 oil rig increase, and yet another natural gas rig was removed from an "other" basin that Baker Hughes doesn't track...

DUC well report for October

Monday saw the release of the EIA's Drilling Productivity Report for November, which includes the EIA's October data for drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions....that data showed a decrease in uncompleted wells nationally for the 17th month in a row, as both completions of drilled wells and drilling of new wells remained well below the pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 222 wells, falling from 5,326 DUC wells in September to 5,104 DUC wells in October, which was also 38.1% fewer DUCs than the 8,239 wells that had been drilled but remained uncompleted as of the end of October of a year ago...this month's DUC decrease occurred as 649 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during October, up from the 635 wells that were drilled in September, while 871 wells were completed and brought into production by fracking, down from the 879 completions seen in September, but up from the pandemic hit 609 completions seen in October of last year, but still down by 19.1% from the 1,076 completions of October 2019....at the October completion rate, the 5,104 drilled but uncompleted wells left at the end of the month represents a 5.9 month backlog of wells that have been drilled but are not yet fracked, down from the 6.1 month DUC well backlog of a month ago, a ratio that is now near that of the year prior to the pandemic, despite a completion rate that is still around a quarter below the pre-pandemic norm...

both oil producing regions and natural gas producing regions saw DUC well decreases in October, and none of the major basins reported a DUC well increase....the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico decreased by 107, from 1,812 DUC wells at the end of September to 1,705 DUCs at the end of October, as 295 new wells were drilled into the Permian during October, while 402 wells in the region were being fracked...at the same time, DUCs in the Eagle Ford shale of south Texas decreased by 35, from 833 DUC wells at the end of September to a record low of 798 DUCs at the end of October, as 62 wells were drilled in the Eagle Ford during October, while 97 already drilled Eagle Ford wells were completed....in addition, there was also a decrease of 29 DUC wells in the Bakken of North Dakota, where DUC wells fell from 541 at the end of September to a record low of 512 DUCs at the end of October, as 42 wells were drilled into the Bakken during September, while 71 of the drilled wells in the Bakken were being fracked....meanwhile, the number of uncompleted wells remaining in Oklahoma's Anadarko basin decreased by 13, falling from 812 at the end of September to 799 DUC wells at the end of October, as 43 wells were drilled into the Anadarko basin during October, while 56 Anadarko wells were completed....in addition, DUC wells in the Niobrara chalk of the Rockies' front range decreased by 87, falling from 375 at the end of September to a record low 368 DUC wells at the end of October, as 90 wells were drilled into the Niobrara chalk during August, while 97 Niobrara wells were being fracked....

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 557 DUCs at the end of September to a record low of 533 DUCs at the end of October, as 69 wells were drilled into the Marcellus and Utica shales during the month, while 93 of the already drilled wells in the region were fracked....meanwhile, the uncompleted well inventory in the natural gas producing Haynesville shale of the northern Louisiana-Texas border region was down by seven to 389 DUCs, as 48 wells were drilled into the Haynesville during October, while 55 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of October, DUCs in the five major oil-producing basins tracked by this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a total of 191 wells to 4,182 wells, while the uncompleted well count in the natural gas basins (the Marcellus, the Utica, and the Haynesville) decreased by 31 wells to 922 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...

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note: there’s more here…

gasoline supplies at a 47 month low; distillate supplies at a 19 mo low; global oil shortage at 1,930,000 barrels per day

natural gas price falls 13% to a 9 week low; gasoline supplies drop to another 47 month low despite diminishing demand; distillate supplies at a 19 month low; global oil shortage at 1,930,000 barrels per day in October as OPEC's output is 588,000 barrels per day short of quota

US oil prices again finished slightly lower for a third straight week, following a record nine straight weeks of​ increasing​ prices that saw ​front month quotes rise more than 36%​​ to a seven year high, as US​ oil​ inventories continued to increase and Biden threatened policy initiatives to lower prices....after falling 2.8% to $81.27 a barrel last week as domestic crude oil inventories grew much more than was expected, the contract price for US light sweet crude for December delivery opened lower on Monday after Biden threatened OPEC with undisclosed "tools in the arsenal" after they refused to pump more oil, but quickly turned around and moved higher after Saudi Aramco raised its official selling prices for December deliveries to Asian and European buyers by larger-than-expected margins and finished the session with a gain of 66 cents​ to $81.93 a barrel, as traders cheered passage of the $1 trillion U.S. infrastructure spending package, which analysts said "screams bullish for oil’'...the oil rally continued into the opening on Tuesday after industry surveys found that OPEC and the 10 producers outside of the cartel led by Russia fell short of their planned production increase last month, finding​ that​ about half of the coalition’s members ​were ​unable to raise output, hamstrung with operational issues and years of underinvestment, and then rallied to settle $2.22 higher at a two week high $84.15 a barrel, as the U.S. lifting of travel restrictions and more signs of a global post-pandemic recovery boosted the demand outlook, even as supplies remained tight...oil prices extended those gains into after hours trading Tuesday, after the API reported a surprise drawdown of crude and gasoline inventories, and hence opened 38 cents higher on Wednesday, but quiclkly turned lower after the EIA's report reversed the API report to show a third consecutive weekly increase in U.S. crude oil inventories, and then dropped sharply at the end of the Wednesday​ ​session​,​ as traders sold out of riskier assets, including stocks and commodities, driven by expectations that central bankers w​ould take steps to curb rising prices​,​ to settle down $2.81 to $81.34 a barrel, as new data had showed US consumer prices were rising at their fastest rate in ​over ​three decades....oil prices extended their losses into morning trading on Thursday, after OPEC's monthly report revised lower its 2021 global demand forecast, citing weaker-than-expected fuel consumption in China and India, but after bouncing around throughout the day traded higher toward the end of the session on confidence that post-pandemic demand would strengthen further in the coming months, settl​ling 25 cents higher at $81.59 a barrel, as traders weighed the odds that Biden, under growing pressure, might tap the Strategic Petroleum Reserve or even ban oil exports in response to rising energy prices...oil prices opened sharply lower on Friday, after a report that U.S. consumer sentiment plummeted to its lowest showing in a decade, with one-in-four American households citing diminished purchasing power and a reduction in living standards....oil then turned lower again after an early afternoon rally to settle down 80 cents or 1% at $80.79 a barrel, a price drop that was enough to leave prices 0.6% lower for the week, with the threat of a possible release of crude from the Strategic Petroleum Reserve also contributing to the week's decline...

meanwhile, the bottom fell out of US natural gas prices this week following falling prices in Europe and on forecasts for contiinued mild weather which assured adequate gas supplies heading into winter....after rising 1.7% to $5.516 per mmBTU last week on a jump in global gas prices and ​greater ​LNG demand, the contract price of natural gas for November delivery opened nearly 2% higher on Monday but quickly turned lower and finished down 8.9 cents at $5.427 per mmBTU, as traders contrasted rising domestic production and mild weather forecasts against strong demand for LNG exports....natural gas prices continued lower without interruption on Tuesday and settled down 44.8 cents or more than 8% at a six week low of $4.979 per mmBTU, after European gas ​prices ​plunged over 10% when Russian gas flows resumed to Germany, and as domestic production held strong and storage levels were projected to prove ample for winter, while weather forecasts pointed to soft demand in both the United States and Europe.... natural gas futures fell another 2% to a seven-week low of $4.880 per mmBTU​ ​on Wednesday as output rose toward a monthly record high and on forecasts for lower heating demand next week than previously expected. but finally turned higher on Thursday as forecasts called for higher demand, European prices rose, and as traders looked toward coming storage reports showing withdrawls from gas stocks, as December natural gas settled with a 5.5% gain of 26.9 cents at $5.149 per mmBTU...however, prices moved lower again on Friday amid unseasonably mild temperatures and light heating demand throughout the eastern United States, and as the warmth was expected to re​t​urn after a brieff shot of cold air, as prices finish​ed​ down 35.8 cents at a nine week low of $4.791 per mmBTU, a loss of 13.1% for the week...

The EIA's natural gas storage report for the week ending November 5th indicated that the amount of working natural gas held in underground storage in the US rose by 7 billion cubic feet to 3,618 billion cubic feet by the end of the week, which still left our gas supplies 308 billion cubic feet, or 7.8% below the 3,926 billion cubic feet that were in storage on November 5th of last year, and 119 billion cubic feet, or 3.2% below the five-year average of 3,737 billion cubic feet of natural gas that have been in storage as of the 5th of November in recent years...the 7 billion cubic foot increase in US natural gas in working storage this week was less than the average forecast for a 15 billion cubic foot addition from a S&P Global Platts survey of analysts, and it was much less than the average addition of 25 billion cubic feet of natural gas that have typically been injected into natural gas storage during the same week over the past 5 years, but more than the 2 billion cubic feet that were 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 November 5th indicated that even after a big increase in our oil refining, an even larger withdrawall of oil from our Strategic Petroleum Reserve meant we had surplus oil to add to our stored commercial crude supplies for the sixth time in seven weeks and for the eleventh time in the past thirty-two weeks….our imports of crude oil fell by an average of 63,000 barrels per day to an average of 6,108,000 barrels per day, after falling by an average of 83,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 128,000 barrels per day to an average of 3,053,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 3,055,000 barrels of per day during the week ending November 5th, 191,000 fewer barrels per day than the net of our imports minus our exports during the prior week…over the same period, production of crude oil from US wells was reportedly unchanged at 11,500,000 barrels per day, and hence our daily supply of oil from the net of our international trade in oil and from domestic well production appears to have totaled an average of 14,555,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,366,000 barrels of crude per day during the week ending November 5th, 343,000 more barrels per day than the amount of oil they processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 306,000 barrels of oil per day were being pulled out 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 oilfield production, and from storage was 504,000 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 (+504,000) 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 balance sheet fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been a error or omission 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 oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably 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 6,090,000 barrels per day last week, which was 14.3% more than the 5,327,000 barrel per day average that we were importing over the same four-week period last year…the 306,000 barrel per day net decrease in our crude inventories came as 143,000 barrels per day were added to our commercially available stocks of crude oil, which in turn was more than offset by a 449,000 barrels per day withdrawal of oil that had been stored in our Strategic Petroleum Reserve, apparently part of an emergency loan of oil to Exxon in the wake of hurricane Ida….this week’s crude oil production was reported to be unchanged at 11,500,000 barrels per day as the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,100,000 barrels per day, while a 10,000 barrel per day increase in Alaska’s oil production to 444,000 barrels per day had no impact on the reported rounded national production total….US crude oil production had hit a pre-pandemic record high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 12.2% below that of our pre-pandemic production peak, but 36.4% above the interim low of 8,428,000 barrels per day that US oil production had fallen to during the last week of June of 2016...

US oil refineries were operating at 86.7% of their capacity while using those 15,366,000 barrels of crude per day during the week ending November 5th, up from 86.3% of capacity the prior week, but a little below normal utilization for mid-autumn refinery operations…the 15,366,000 barrels per day of oil that were refined this week were 14.3% more barrels than the 13,447,000 barrels of crude that were being processed daily during the pandemic impacted week ending November 6th of last year, but still 3.5% less than the 15,916,000 barrels of crude that were being processed daily during the week ending November 8th, 2019, when US refineries were operating at what was then also a below normal 87.8% of capacity...

Despite the big increase in the amount of oil being refined this week, the gasoline output from our refineries was somewhat lower, decreasing by 122,000 barrels per day to 10,054,000 barrels per day during the week ending November 5th, after our gasoline output had increased by 104,000 barrels per day over the prior week.…this week’s gasoline production was still 7.9% more than the 9,319,000 barrels of gasoline that were being produced daily over the same week of last year, but 1.2% less than the gasoline production of 10,173,000 barrels per day during the week ending November 8th, 2019….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 35,000 barrels per day to 4,868,000 barrels per day, after our distillates output had increased by 252,000 barrels per day over the prior week…after the recent increases, our distillates output was 14.9% more than the 4,237,000 barrels of distillates that were being produced daily during the week ending November 6th, 2020, but 3.4% less than the 5,039,000 barrels of distillates that were being produced daily during the week ending November 8th, 2019..

Despite the increase in our gasoline production, our supplies of gasoline in storage at the end of the week decreased for the eighth time in eleven weeks, and for the seventeenth time in twenty-nine weeks, falling by 1,555,000 barrels to a 47 month low of 212,703,000 barrels during the week ending November 5th, after our gasoline inventories had decreased by 1.488,000 barrels over the prior week...our gasoline supplies decreased this week even though the amount of gasoline supplied to US users fell by 245,000 barrels per day to  9,259,000 barrels per day, as our imports of gasoline fell by 80,000 barrels per day to 587,000 barrels per day, while our exports of gasoline rose by 73,000 barrels per day to 833,000 barrels per day…after this week’s inventory decrease, our gasoline supplies were 5.6% lower than last November 6th's gasoline inventories of 225,356,000 barrels, and about 4% below the five year average of our gasoline supplies for this time of the year…

Even with the increase in our distillates production, our supplies of distillate fuels decreased for the ninth time in eleven weeks and for the 21st time in 31 weeks, falling by 2,613,000 barrels to a 19 month low of 124,509,000 barrels during the week ending November 5th, after our distillates supplies had increased by 2,160,000 barrels during the prior week….our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 594,000 barrels per day to 4,280,000 barrels per day, and because our exports of distillates rose by 211,000 barrels per day to 1,239,000 barrels per day, while our imports of distillates rose by 88,000 barrels per day to 278,000 barrels per day....after twenty-one inventory decreases over the past thirty-one weeks, our distillate supplies at the end of the week were 16.6% below the 149,289,000 barrels of distillates that we had in storage on November 6th, 2020, and about 6% below the five year average of distillates stocks for this time of the year…

Meanwhile, with this week's big crude withdrawal from our Strategic Petroleum Reserve covering the increased refinery demand, our commercial supplies of crude oil in storage rose for the ninth time in the past twenty-four weeks and for the 19th time in the past year, increasing by 1,002,000 barrels over the week, from 434,102,000 barrels on October 29th to 435,104,000 barrels on November 5th, after our commercial crude supplies had increased by 3,290,000 barrels over the prior week…but even after this week’s increase, our commercial crude oil inventories slipped to around 7% below the most recent five-year average of crude oil supplies for this time of year, but were still more than 27.2% above the average of our crude oil stocks as of the first weekend of November over the 5 years at the beginning of the past 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 and remained elevated for most of the year after that, our commercial crude oil supplies as of this November 5th were 11.0% less than the 488,706,000 barrels of oil we had in commercial storage on November 6th of 2020, and are now 3.1% less than the 449,001,000 barrels of oil that we had in storage on November 8th of 2019, and 1.6% less than the 442,057,000 barrels of oil we had in commercial storage on November 9th of 2018…

Finally, with our inventory of crude oil and our supplies of all products made from oil still near multi year lows, we are continuing to track the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....the EIA's data shows that total oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, fell by 4,330,000 barrels this week, from 1,846,463,000 barrels on October 29th to 1,842,133,000 barrels on November 5th, but they are still 506,000 barrels higher than the six year low of five weeks earlier... 

OPEC's October Oil Market Report

Thursday of this week saw the release of OPEC's November Oil Market Report, which ​includes OPEC & global oil data for October, and hence it gives us a picture of the global oil supply & demand situation for the third month after 'OPEC+' agreed to increase their output by 400,000 barrels per day monthly from the previously agreed to July level, which was part of the fifth production quota policy reset they've made over the past year and a half, all in response to the pandemic-related slowdown and subsequent irregular recovery...we'll again caution that the oil demand estimates made by OPEC herein, while the course of the Covid-19 pandemic still remains uncertain in most countries around the globe, should be considered as having a much larger margin of error than we'd expect from this report during stable and hence more predictable periods..

the first table from this monthly report that we'll check is from the page numbered 49 of this month's report (pdf page 59), 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 below 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 a means of impartially adjudicating whether their output quotas and production cuts are being met, to thereby avert any potential disputes that could arise if each member reported their own figures...

As we can see on the bottom line of the above table, OPEC's oil output increased by 217,000 barrels per day to 27,453,000 barrels per day during October, up from their revised September production total of 26,236,000 barrels per day...however, that September output figure was originally reported as 27,328,000 barrels per day, which therefore means that OPEC's September production was revised down by 92,000 barrels per day with this report, and hence OPEC's October production was, in effect, just a 125,000 barrel per day increase from the previously reported OPEC production figure (for your reference, here is the table of the official September OPEC output figures as reported a month ago, before this month's revision)...

According to the agreement reached between OPEC and the other oil producers at their Ministerial Meeting on July 18th, the oil producers party to that agreement were to raise their output by a total of 400,000 barrels per day in October, which would include an increase of 254,000 barrels per day from the OPEC members listed above...but as you can see from the above table, OPEC's increase of 217,000 barrels per day was a bit less than that....since each OPEC member was expected to raise their output in October, the production decreases of 45,000 barrels per day by Nigeria, 17,000 barrels per day from Gabon, and 13,000 barrels per day from Equatorial Guinea were the reason that OPEC failed to meet their expected output quota...while i heard no news from Gabon or Equatorial Guinea that would account for their production decrease, it's​ likely that an equipment failure and subsequent oil spill at a Bayelsa wellhead on October 17​, as well as persistent domestic sabotage of the country's main oil pipeline, were the reasons for Nigeria's drop in output...

Recall that last year's original oil producer's agreement was to cut production by 9.7 million barrels per day from an October 2018 baseline for just two months early in the pandemic, during May and June of last year, but that initial agreement had been extended to include July 2020 at a meeting between OPEC and other producers on June 6th, 2020....then, in a subsequent meeting in July of last year, OPEC and the other oil producers agreed to ease their deep supply cuts by 2 million barrels per day to 7.7 million barrels per day for August 2020 and subsequent months, which thus became the agreement that governed OPEC's output for the rest of 2020...the OPEC+ agreement for this January's production, which was later extended to include February and March and then April's output, was to further ease their supply cuts by 500,000 barrels per day to 7.2 million barrels per day from that original baseline...then, during a difficult meeting on April 1st of this year, OPEC and the other oil producers that are aligned with them agreed to incrementally adjust their oil production higher each month over the next three months, taking their ​joint output cut ​agreement through July....production levels for August and the following months of this year were to be determined by a July 1st meeting, but that meeting was adjourned on July 2nd due to a dispute between the UAE and the Saudis over reference production levels, and a subsequent attempt to restart that meeting on July 5th was called off....so it wasn't until July 18th that a tentative compromise addressing August quotas was worked out, allowing oil producers in aggregate to increase their production by 400,000 barrels per day in August and again​ by that amount​ in each of the later months, and boosting reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022...

OPEC arrived at the production quotas for August and September of this year by repeatedly adjusting the original 23%, or 9.7 million barrel per day production cut from the October 2018 baseline that they first agreed to for May and June 2020, first to a 7.7 million barrel per day output reduction from the baseline for the remainder of 2020, then to a 7.2 million barrel per day production cut from the baseline for the first four months of this year, which was actually raised to an 8.2 million barrel per day output reduction after the Saudis unilaterally committed to cut their own production by a million barrels per day during February, March, and then later during April of this year....under the prior agreement, OPEC's production cut in April was at 4,564,000 barrels per day from the October 2018 baseline, which was lowered to a cut of 3,650,000 barrels per day from the baseline with the latest agreement, which thus set the July production quota for the "OPEC 10" at 23,033,000 barrels per day, with war torn Libya and US sanctioned producers Iran and Venezuela exempt from the production cuts imposed by this agreement....for OPEC and the other producers to increase their output by 400,000 barrels per day from that July level, each producer would be allowed to increase their production by just over 1% per month...for the ten members of OPEC who agreed to impose cuts on themselves, that would mean their August output quota would be roughly 23,27​7,000 barrels per day, then 23,5​31,000 barrels per day in September, and then roughly 23,7​86,000 barrels per day in October....therefore, the 23,197,000 barrels those 10 OPEC members produced in October were 5​88,000 barrels per day short of what they were expected to produce, with Nigeria, Angola and the Saudis accounting for the most of this month's shortfall..

The next graphic from this month's report that we'll highlight shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from November 2019 to October 2021, and it comes from page 50 (pdf page 60) of OPEC's November Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC's monthly 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....

Including this month's 217,000 barrel per day increase in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate indicates that total global liquids production increased by a rounded 1,740,000 barrels per day to average 97.56 million barrels per day in October, a reported increase which apparently came after September's total global output figure was revised down by 110,000 barrels per day from the 95.93 million barrels per day of global oil output that was estimated for September a month ago, as non-OPEC oil production rose by a rounded 1,520,000 barrels per day in October after that revision, with more than two-thirds of the increase coming from OECD countries, predominantly the US, due to the production recovery after Hurricane Ida, while non-OECD countries saw their production increase by 480,000 barrels per day in October, with most of that​ increase coming​ from Kazakhstan...

After that increase in October's global output, the 97.56 million barrels of oil per day that were produced globally during the month were 6.65 million barrels per day, or 7.3% more than the revised 90.91 million barrels of oil per day that were being produced globally in October a year ago, which was the third month after OPEC and other producers agreed to reduce their output cuts from 9.7 million barrels per day to 7.7 million bpd (see the November 2020 OPEC report (online pdf) for the originally reported October 2020 details)...with this month's relatively small increase in OPEC's output, their October oil production of 27,453,000 barrels per day fell to 28.1% of what was produced globally during the month, a decrease of 0.3% from their revised 28.4% share of the global total in September, which itself was revised down from 28.5%, due to this month's downward revision to OPEC's September output....OPEC's October 2020 production was reported at 24,386,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 3,067,000 barrels per day, or 12.6% more barrels per day of oil this October than what they produced a year earlier, when they accounted for 26.7% of global output...

Even after the increases in OPEC's and global oil output that we've seen in this report, the amount of oil being produced globally during the month again fell short of the expected global demand, as this next table from the OPEC report will show us..

The above table came from page 27 of the OPEC November Oil Market Report (pdf page 37), and it shows regional and total oil demand estimates in millions of barrels per day for 2020 in the first column, and then OPEC's estimate of oil demand by region and globally, quarterly over 2021 over the rest of the table...on the "Total world" line in the fifth column, we've circled in blue the figure that's relevant for October, which is their estimate of global oil demand during the fourth quarter of 2021... OPEC is estimating that during the 4th quarter of this year, all oil consuming regions of the globe will be using an average of 99.49 million barrels of oil per day, which as you can see in the green ellipse above, is a rounded 0.33 million barrels per day downward revision from the 99.82 million barrels per day they had estimated for the 4th quarter a month ago, still reflecting a bit of coronavirus related demand destruction compared to 2019, when global demand averaged over 101 million barrels per day during second half of the year....but 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 97.56 million barrels per day during October, which would imply that there was a shortage of around 1,930,000 barrels per day in global oil production in October when compared to the demand estimated for the month...

in addition to figuring that October oil shortage implied by this report, the downward revision of 110,000 barrels per day to September's global oil output that's implied in this report, combined with the 440,000 barrels per day downward revision to 3rd quarter demand that we've circled in green, means that the 2,400,000 barrels per day global oil output shortage we had previously figured for September would now be revised to a shortage of 2,007,000 barrels per day....in like manner, 440,000 barrels per day downward revision to 3rd quarter demand means that the shortage of 3,020,000 barrels per day we had previously figured for August would now be revised to a shortage of 2,580,000 barrels per day, and that the shortage of 2,600,000 barrels per day barrels per day we had previously figured for July would have to be revised to a shortage of 2,160,000 barrels per day...  

Note that in green we've also circled a modest upward revision of 20,000 barrels per day to the second quarter's demand, a quarter when there was also a shortage of oil being produced globally.... based on that small upward revision to demand, our previous estimate that there was a shortage of 660,000 barrels per day in June would now be revised to a 680,000 barrels per day shortage, the oil shortage of 1,990,000 barrels per day that we had previously figured for May would have to be revised to a shortage of 2.010,000 barrels per day, and that the 2,340,000 barrels per day global oil output shortage we should have figured for April would have to be revised to a shortage of 2,360,000 barrels per day...

Also note that in green we have also circled an upward revision of 100,000 barrels per day to OPEC's previous estimate of first quarter demand....for March, that means that the global oil output surplus of 240,000 barrels per day we had previously figured for March would now be revised to a surplus of 140,000 barrels per day... similarly, the ​upward revision to first quarter demand means that the 770,000 barrels per day global oil output shortage we had previously figured for February would now be revised to a shortage of 870,000 barrels per day, and that the global oil output surplus of 450,000 barrels per day we had previously figured for January would now be revised to a surplus of 350,000 barrels per day, in light of that 100,000 barrel per day upward revision to first quarter demand...

This Week's Rig Count

The number of drilling rigs active in the US increased for the 51st time out of the past 60 weeks during the week ending November 12th, but they remained 30.7% below the pre-pandemic rig count....Baker Hughes reported that the total count of rotary rigs running in the US increased by six to 556 rigs this past week, which was also 244 more rigs than the pandemic hit 312 rigs that were in use as of the November 13th report of 2020, but was also still 1,373 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, a week before OPEC began to flood the global oil market in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 4 to 454 oil rigs this week, after they had increased by 6 oil rigs the prior week, and there are now 218 more oil rigs active now than were running a year ago, even as they still amount to just 28.2% of the 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 102 natural gas rigs, which was also up by 29 natural gas rigs from the 73 natural gas rigs that were drilling during the same week a year ago, but still only 6.4% of the modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….but last year's rig count also included 3 rigs that Baker Hughes had classified as "miscellaneous', while there are no such "miscellaneous' rigs deployed this week...

The Gulf of Mexico rig count was up by two to fifteen rigs this week, now topping the 14 rigs deployed in the Gulf the week before Hurricane Ida approached, with thirteen of this week's Gulf rigs drilling for oil in Louisiana waters and two more drilling for oil in Alaminos Canyon, offshore from Texas....the Gulf rig count is also up by two rigs from the thirteen rigs in the Gulf a year ago, when 12 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil in Texas waters…since there is now no drilling off our other coasts, nor was there a year ago, the Gulf rig count is equal to the national offshore totals..

In addition to those rigs offshore, we continue to have two water based rigs drilling inland; one is a directional rig targeting oil at a depth of over 15,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, and the other is drilling for oil in the Galveston Bay area, and hence the inland waters rig count of two is up from one from a year ago..

The count of active horizontal drilling rigs was up by 7 to 499 horizontal rigs this week, which was 87% more than the 267 horizontal rigs that were in use in the US on November 13th of last year, but was just 35.8% of the record 1,374 horizontal rigs that were deployed on November 21st of 2014..…at the same time, the directional rig count was up by 2 to 35 directional rigs this week, and those are up by 12 from the 23 directional rigs that were operating during the same week a year ago….on the other hand, the vertical rig count was down by 3 to 22 vertical rigs this week, and those just matched the 22 vertical rigs that were in use on November 13th 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 November 12th, the second column shows the change in the number of working rigs between last week’s count (November 5th) and this week’s (November 12th) count, the third column shows last week’s November 5th 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 13th of November, 2020...

as you can see, this week's changes were driven by that ten rig increase in Texas, so checking Texas first in the Rigs by State file at Baker Hughes, we find that three rigs were added in Texas Oil District 8, which is the core Permian Delaware, and that three more rigs were added in Texas Oil District 8A, which would be the northern counties of the Permian Midland, thus indicating a overall six rig increase in the Texas Permian...since the national Permian rig count was only up by one, that means that all 5 rigs that were removed in New Mexico had been drilling in the western Permian Delaware...elsewhere in Texas, a rig was added in Texas Oil District 1 and another rig was added in Texas Oil District 2., either of which could have accounted for the oil rig addition in the Eagle Ford shale, while yet another rig was added in Texas Oil District 6, which would normally be indicative of natural gas increase in the Haynesville shale, but in this case it was an oil rig in ​the ​​easternmost ​Barnett shale near Dallas...the last Texas rig addition was​ one of those​ targeting oil offshore​ from the state​, and an offshore oil rig increase also accounts for Louisiana's rig pickup this week...elsewhere, an increase of two oil rigs in Oklahoma's Cana Woodford was offset by a decrease of two oil rigs in Oklahoma's Ardmore Woodford, leaving the Oklahoma rig count unchanged, while an increase of two ​rigs in Ohio's Utica shale accounts for national natural gas rig increase....that was not the only natural gas rig change, however, as a shallow vertical rig targeting natural gas was pulled out of Kanawha county, West Virginia, while one of the Texas Permian rig additions was targeting natural gas, and is currently the only natural gas rig in that basin, along with 271 oil rigs...

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note: there’s more here…