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, February 28, 2022

oil tops $100 for first time since July 2014; SPR at a 19 year low; total oil + products supplies at a 7 3/4 year low

US oil price tops $100 for first time since July 2014; SPR at a new 19 year low; total oil + products supplies, including SPR, at a 7 3/4 year low; distillate supplies at 26 month low; natural gas drilling at a 26 month high

oil prices increased for the ninth time in ten weeks this week and hit a new 7 1/2 year high after the Russian police action in eastern Ukraine turned into a full scale invasion...after falling 2.2% to $91.07 a barrel last week as oil traders were disheartened by the possibility of a nuclear peace deal with Iran, the contract price for US light sweet crude for March delivery jumped more than 3% to as high as $96 a barrel in off-exchange trading Monday, as Russia moved troops into two breakaway regions of eastern Ukraine, and Putin announced he would recognize their independence....hence, oil prices opened higher and rallied more than 3% to a 7-1/2 year high shortly after NYMEX opened on Tuesday, reflecting concerns that Russia is a major exporter of oil to the US, and also supplies more than a third of Europe's natural gas, much of it via Russian pipelines through Ukraine, before they pulled back to settle $1.28 higher at $92.35 a barrel, after analysts determined new sanctions announced by the US and the EU would have just a limited impact on the Russian economy...at the same time, the benchmark contract for US crude for April delivery settled $1.70 higher at $91.91 a barrel, as trading in the March oil contract expired...with the price for April oil now being quoted by the media, oil prices drifted lower early Wednesday as traders weighed the impact of US-Iran talks, after it became clear the first wave of U.S. and European sanctions on Russia would not disrupt oil supplies, and later steadied below the 2014 highs with a 19 cent gain to $92.09 a barrel, as sanctions imposed by the US, the EU, Britain, Australia, Canada and Japan were focused on Russian banks and elites, and not on energy...however, oil prices opened higher and shot to above $100 a barrel on Thursday, with European oil prices topping $105, after Russia launched an all-out invasion of Ukraine by land, air and sea, but pulled back later after weekly inventory data released by the EIA showed a second consecutive build in domestic crude oil inventories to settle just 71 cents higher at $92.81 a barrel amid signs that the United States and European allies would not consider sanctioning Russia's oil and gas exports, in order to ensure adequate supplies on the global market, but would instead go after its financial, military and industrial sectors.....after rising sharply early in the Friday session on concern over the potential for global supply disruptions from sanctions on major crude exporter Russia, oil prices turned lower as oil traders were forced to grapple with a fluid market environment, and settled down $1.22 at $91.59 a barrel after the US, the EU, and the UK signaled they have prepared a third package of sanctions against Russia, including on Russian President Vladimir Putin...but even given the impact of the invasion, oil prices only finished 0.6% higher on the week, while the April contract for US crude, which had ended the prior week priced at $90.21, settled with a 1.5% gain...

natural gas prices also finished higher, despite a midweek switch to the lower priced April contract, on raging European gas prices and another spate of natural gas well freeze-offs... after rising 12.4% to $4.431 per mmBTU last week on forecasts for cold weather to persist into early March.  the contract price of natural gas for March delivery opened more than 3% higher on Tuesday on forecasts for higher heating demand over the next two weeks, and on a 10% jump in European gas futures that could keep U.S. LNG exports near record highs, before settling 6.7 cents higher at $4.498 per mmBTU....gas prices then rose 12.5 cents or nearly 3% to $4.623 per mmBTU on Wednesday, as sub-freezing temperatures descended into the Lower 48 and resulted in a precipitous decline in production due to gas well freeze-offs, but pulled back and fell 5.5 cents to $4.568 per mmBTU on Thursday​, despite a 60% jump in a key European natural gas benchmark, as trading in the US March natural gas contract expired with the end of winter weather in clear view and March forecasts far from threatening....with natural gas quotes now referencing the contract price of natural gas for April delivery, which had closed Thursday priced at $4.641 per mmBTU, natural gas fell 17.1 cents to $4.470 per mmBTU on Friday, weighed down by forecasts for lower demand over the next week and a sharp drop in European gas prices...natural gas still managed to end the week 0.9% higher, while the April contract, which had ​ended the prior week priced at $4.377 per mmBTU, finished with a 2.1% gain...

The EIA's natural gas storage report for the week ending February 18th indicated that the amount of working natural gas held in underground storage in the US fell by 129 billion cubic feet to 1,782 billion cubic feet by the end of the week, which left our gas supplies 209 billion cubic feet, or 10.5% below the 1,991 billion cubic feet that were in storage on February 18th of last year, and 214 billion cubic feet, or 10.7% below the five-year average of 1,996 billion cubic feet of natural gas that have been in storage as of the 18th of February over the most recent five years....the 129 billion cubic foot withdrawal from US natural gas working storage for the cited week was in line with the average forecast for a 128 billion cubic foot withdrawal expected by an S&P Global Platts survey of analysts, but it was dwarfed by the 324 billion cubic feet that were pulled from natural gas storage during "winter storm Uri" during the corresponding week of 2021, and was also much less than the average withdrawal of 166 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 February 18th indicated that after a big jump in our oil imports, we had oil left to add to our stored commercial crude supplies for the fourth time in 13 weeks and for the 14th time in the past thirty-nine weeks…our imports of crude oil rose by an average of 1,038,000 barrels per day to an average of 6,828,000 barrels per day, after falling by an average of 599,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 415,000 barrels per day to an average of 2,686,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 4,142,000 barrels of per day during the week ending February 18th, 623,000 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 unchanged at 11,600,000 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 15,742,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,246,000 barrels of crude per day during the week ending February 18th, an average of 344,000 more barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 296,000 barrels of oil per day were being added to 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 and from oilfield production was 200,000 barrels per day more than what was added to storage plus 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 inserted a (-200,000) 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)….

This week's 296,000 barrel per day increase in our overall crude oil inventories came as 645,000 barrels per day were being added to our commercially available stocks of crude oil, while 349,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, part of the Biden' administration plan to release 50 million barrels from the SPR to incentivize US gasoline consumption....including other withdrawals from the Strategic Petroleum Reserve under similar recent programs, a total of 73,765,000 barrels have been removed from the Strategic Petroleum Reserve over the past 19 months, and as a result the 582,384,000 barrels of oil now left in our Strategic Petroleum Reserve is now the lowest since September 6th, 2002, or at yet another new 19 year low, as repeated tapping of our emergency supplies for non-emergencies has already drained those supplies considerably over the past dozen years...based on an estimated prepandemic consumption level of around 18 million barrels per day, the US would have roughly 30 1/2 days of oil supply left in the Strategic Petroleum Reserve when the initial Biden program is complete, not counting what else might yet be withdrawn in the wake of the Ukraine situation...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,523,000 barrels per day last week, which was 14.1% more than the 5,715,000 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 unchanged at 11,600,000 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 Alaska’s oil production was 3,000 barrels per day lower at 458,000 barrels per day but had no impact on the rounded national production total...US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 11.5% below that of our pre-pandemic production peak, but 37.6% 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 87.4% of their capacity while using those 15,246,000 barrels of crude per day during the week ending February 18th, up  from a utilization rate of 85.3% the prior week, but still lower than the historical utilization rate for mid February refinery operations…the 15,246,000 barrels per day of oil that were refined this week were 24.6% more barrels than the 12,230,000 barrels of crude that were being processed daily during the winter storm Uri impacted week ending February 19th of 2021, but 4.8% less than the 16,210,000 barrels of crude that were being processed daily during the week ending February 21st, 2020, when US refineries were operating at what was then also a lower than normal 87.9% of capacity...

With the big increase in oil being refined this week, gasoline output from our refineries was also much higher, increasing by 440,000 barrels per day to 9,270,000 barrels per day during the week ending February 18th, after our gasoline output had decreased by 560,000 barrels per day over the prior week.…this week’s gasoline production was 19.8% more than the 7,736,000 barrels of gasoline that were being produced daily over the same week of last year, but 5.4% less than the gasoline production of 9,797,000 barrels per day during the week ending February 21st, 2020....at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 238,000 barrels per day to 4,693,000 barrels per day, after our distillates output had decreased by 244,000 barrels per day over the prior week…with that increase, our distillates output was 23.0% more than the 3,621,000 barrels of distillates that were being produced daily during the week ending February 19th of 2021, but 8.1% less than the 4,846,000 barrels of distillates that were being produced daily during the week ending February 21st, 2020...

Even with the big decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fifth time in the past 13 weeks, decreasing by 582,000 barrels to  246,479,000 barrels during the week ending February 18th, after our gasoline inventories had decreased by 1,332,000 barrels over the prior week....our gasoline supplies decreased again this week because the amount of gasoline supplied to US users increased by 83,000 barrels per day to 8,657,000 barrels per day, and because our imports of gasoline fell by 139,000 barrels per day to 416,000 barrels per day, and because our  exports of gasoline rose by 246,000 barrels per day to 685,000 barrels per day…after this week's decrease, our gasoline supplies were 4.1% lower than last February 19th's gasoline inventories of 257,096,000 barrels, and about 3% below the five year average of our gasoline supplies for this time of the year…

Meanwhile, even with this week's sizable increase in our distillates production, our supplies of distillate fuels decreased for the eighteenth time in twenty-five weeks, falling by 584,000 barrels to a twenty six month low of 119,678,000 barrels during the week ending February 11th, after our distillates supplies had decreased by 1,552,000 barrels during the prior week….our distillates supplies fell again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 82,000 barrels per day to 4,233,000 barrels per day, because our exports of distillates rose by 166,000 barrels per day to 960,000 barrels per day while our imports of distillates fell by 21,000 barrels per day to 416,000 barrels per day....after thirty-two inventory decreases over the past forty-six weeks, our distillate supplies at the end of the week were 21.6% below the 152,715,000 barrels of distillates that we had in storage on February 19th of 2021, and about 19% below the five year average of distillates inventories for this time of the year…

Meanwhile, after the jump in our oil imports, our commercial supplies of crude oil in storage rose for the 11th time in 29 weeks and for the 19th time in the past year, increasing by 4,514,000 barrels over the week, from 411,508,000 barrels on February 11th to 416,022,000 barrels on February 18th, the biggest jump in commercial crude since October 10th, after our commercial crude supplies had increased by 1,121,000 barrels over the prior week…with this week’s increase, our commercial crude oil inventories increased to about 9% below the most recent five-year average of crude oil supplies for this time of year, and rose to almost 30% above the average of our crude oil stocks as of third weekend of February 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 spring 2020 and remained elevated for most of a year after that, our commercial crude oil supplies as of this February 18th were still 10.2% less than the 463,042,000 barrels of oil we had in commercial storage on February 19th of 2021, and also 6.1% less than the 443,335,000 barrels of oil that we had in storage on February 21st of 2020, and also 6.6% less than the 445,865,000 barrels of oil we had in commercial storage on February 22nd of 2019…

Finally, with our inventory of crude oil and our supplies of all products made from oil all 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 the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 4,273,000 barrels this week, from 1,745,787,000 barrels on February 11th to 1,741,514,000 barrels on February 18th...that left our total supplies of oil & its products now at the lowest since April 25th, 2014, or at a new seven and a half year low, despite this week's big increase in commercial crude inventories.;..

This Week's Rig Count

The number of drilling rigs running in the US increased for the 64th time over the past 75 weeks during the week ending February 25th, but were still 18.0% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by five to 650 rigs this past week, which was also 248 more rigs than the pandemic hit 402 rigs that were in use as of the February 26th report of 2021, but was still 1,279 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 market with oil in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 2 to 520 oil rigs during this week, after oil rigs had increased by 4 during the prior week, and there are now 213 more oil rigs active than were running a year ago, even as they still amount to just 32.3% of the shale era 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 increased by 3 rigs to 127 natural gas rigs, which was the most natural gas rigs since December 13th, 2019, also up by 35 natural gas rigs from the 92 natural gas rigs that were drilling during the same week a year ago, but still only 7.9% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition, Baker Hughes continues to list a rig drilling vertically for a well intended to store CO2 emissions in Mercer county, North Dakota, as 'miscellaneous', which thus matches the 'miscellaneous' rig count of one of a year ago

The offshore rig count in the Gulf of Mexico was unchanged at twelve rigs this week, with eleven of th​ose Gulf rigs still drilling for oil in Louisiana waters, and another rig drilling for oil in Alaminos Canyon, offshore from Texas....that's down by 5 from the 17 offshore rigs that were active in the Gulf a year ago, when 15 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters…since there is not any drilling off our other coasts at this time, nor was there a year ago, those Gulf of Mexico rig counts are equal to the national offshore totals for both years....

In addition to those rigs offshore, we now have 3 water based rigs drilling inland; one is a horizontal rig targeting oil at a depth of between 5000 and 10,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, another is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area, while the third inland waters rig is a directional rig targeting oil at a depth of between 10,000 and 15,000 feet in St. Mary Parish, Louisiana... During the same week a year ago, there were no inland waters rigs deployed..

The count of active horizontal drilling rigs was up by 4 to 593 horizontal rigs this week, which was also 234 more rigs than the 359 horizontal rigs that were in use in the US on February 26th of last year, but still 56.8% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the vertical rig count was up by 1 rig to 26 vertical rigs this week, which was also up by 1 from the 25 vertical rigs that were operating during the same week a year ago…meanwhile, the directional rig count was unchanged at 31 directional rigs this week, and those were still up by 13 from the 18 directional rigs that were in use on February 26th of 2021….

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 February 25th, the second column shows the change in the number of working rigs between last week’s count (February 18th) and this week’s (February 25th) count, the third column shows last week’s February 18th 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 26th of February, 2021...

with the four rig increase in Texas and the three rig increase in the Permian basin, we'll start by checking the Rigs by State file at Baker Hughes for the changes in that basin...there we find that four rigs were added in Texas Oil District 8, which encompasses the core Permian Delaware, while two rigs were pulled out of Texas Oil District 7C, which includes the ​Texas ​counties ​in the southern part of the Permian Midland...with the net increase in Texas Permian thus accounting for just two of the three rig increase in that basin, we have to figure that the rig added in New Mexico was in the far western Permian Delaware, in the southeast corner of that state...

elsewhere in Texas, there were also two rigs added in Texas Oil District 6, which accounts for two of the natural gas rig additions in the Haynesville shale, with the other Haynesville addition​ being​ in northwest Louisiana, thus accounting for that state's rig increase this week...outside of the Permian and the Haynesville, the only other rig addition this week was an oil rig in the Mississippian limestone in Kansas, in the first drilling in that state since the sporadic drilling in 2019​; ​while there has been other Mississippi lime activity since, it has all been in Oklahoma...meanwhile, the two rigs that were removed from the Granite Wash basin had been deployed in Oklahoma, in the area of that state just east of the Texas Panhandle..

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Monday, February 21, 2022

oil supplies at a 13 year low; oil + products supplies at a 7 1/2 year low; DUCs down 40% YoY, lowest since Jan 2014

US oil supplies are at a 13 year low, Strategic Petroleum Reserve at a 19 year low; total oil + products supplies at a 7 1/2 year low; distillate supplies are at 26 month low after refinery freeze offs; DUCs down 40% YoY and are lowest since January 2014, with DUCs in 4 basins at record lows; 5.0 month DUC backlog is lowest in 7 years; natural gas rigs rise most in 57 months…

oil prices fell for the first time in 9 weeks this week as the invasion of Ukraine threatened by the ​US ​state department failed to materialize and as oil traders were disheartened by the possibility of a nuclear peace deal with Iran....after rising 0.9% to a 7 year high of $93.10 a barrel last week after the White House advised that a Russian invasion of Ukraine was imminent, the contract price for US light sweet crude for March delivery opened nearly 1% higher on Monday, as Sunday comments from the US about an imminent attack by Russia on Ukraine rattled global financial markets, and surged $2.36, or 2.5%, to settle at $95.46 a barrel, on fears that an invasion of Ukraine by Russia could trigger U.S. and European sanctions that would disrupt exports from the world's top oil producer in an already tight market...but oil prices plummeted nearly $5 a barrel on Tuesday after Russia announced a partial withdrawal of its military troops along the Ukrainian border and settled $3.39 or 3.5% lower at $92.07 a barrel, as Moscow wound down troops that had ringed Ukraine’s borders for more than two months, removing a huge geopolitical premium from energy markets...however, oil prices rallied early Wednesday, after the American Petroleum Institute reported total petroleum stockpiles in the US had declined again, with commercial oil supplies at their lowest level since September 2018 at a time when fuel consumption showed signs of a solid rebound after winter storms and the Omicron surge, and then topped $94 a barrel after the weekly report from the EIA showed gasoline and distillate stocks fell by larger-than-expected margins, offsetting a surprise build in commercial crude oil inventories, before settling with a $1.59 gain on the day at $93.66 a barrel after the head of the International Energy Agency (IEA) called on OPEC and its allies to boost production to meet agreed output targets...oil prices then opened nearly 3% lower on Thursday following reports U.S. and Iranian negotiators were closing in on a nuclear agreement that could soon lead to the lifting of sanctions on the country's crude oil exports, but ​partly ​recovered to finish $1.90 or 2% lower at $91.76 as losses were limited by heightened tensions between the world's top energy exporter Russia and the West over Ukraine...oil prices headed lower again on Friday as traders assessed Iran's capacity to bring back more than 1 million barrels per day in now sanctioned oil exports, easing concerns over supply tightness on the global oil market and offsetting the potential risk of supply disruption in Eastern Europe. but pared steep early losses to settle 69 cents lower at $91.07 a barrel amid reports of escalating violence in Russia-controlled regions of eastern Ukraine that, according to U.S. officials, could serve as a pretext for an attack by Moscow that would trigger sanctions on the country's oil and gas exports, but still finished 2.2% lower on the week as traders weighed heightened geopolitical tensions over Ukraine against the potential for Iranian barrels to be added to the market...

natural gas prices, on the other hand, finished higher for the first time in three weeks on forceasts for cold weather to persist into early March...after falling 13.8% to $3.941 per mmBTU last week as temperature forecasts continued to moderate throughout the week, the contract price of natural gas for March delivery opened more than 3% higher on Monday and spiked another 4% from th​at point before settling 25.4 cents higher at $4.195 per mmBTU​,​ after an 8% jump in European gas prices on the possibility of a Russian cut off of gas supplies kept demand for US LNG exports at new highs. and as the European weather model indicated a prolonged winter for the US....natural gas prices were again more than 6% higher early Tuesday on the increasing potential for cold weather to linger into early March, but settled with an 11.1 cent or a 2.7% gain at $4.306 per mmBTU​,​ sliding as part of a broader commodities sell-off amid easing political tensions...but natural gas prices jumped ​41.1 cents or ​almost 10% to near a two-week high​ of ​$4.​717 per mmBTU on Wednesday on forecasts for much colder weather and higher heating demand through early March than had been previously forecast​, and then gave half of that​ big gain​ back on Thursday as March contract prices fell 23.1 cents to $4.486 per mmBTU on a slightly smaller-than-expected storage draw last week and as gas production slowly recovered from freeze-off-related reductions earlier this month...natural gas prices eased on Friday ahead of the long weekend. slipping 5.5 cents or 1.2% to $4.431 per mmBTU, on a continued slow recovery in output from cold weather-related ​output ​reductions earlier in the month and on modeerating forecasts for next week, but still finished 12.4% higher for the week, largely thanks to a much colder forecast for early March​...​

The EIA's natural gas storage report for the week ending February 11th indicated that the amount of working natural gas held in underground storage in the US fell by 190 billion cubic feet to 1,911 billion cubic feet by the end of the week, which left our gas supplies 404 billion cubic feet, or 17.5% below the 2,315 billion cubic feet that were in storage on February 11th of last year, and 251 billion cubic feet, or 11.6% below the five-year average of 2,162 billion cubic feet of natural gas that have been in storage as of the 11th of February over the most recent five years....the 190 billion cubic foot withdrawal from US natural gas working storage for the cited week was less than the average forecast for a 197 billion cubic foot withdrawal expected by an S&P Global Platts survey of analysts, and was much less than the 227 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, but also quite a bit more than the average withdrawal of 154 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 February 11th indicated that after a big drop in our oil exports, a major slowdown in our oil refining due to freezing weather on the Gulf Coast, and a big withdrawal of oil from our Strategic Petroleum Reserve, we had oil left to add to our stored commercial crude supplies for the third time in 12 weeks and for the 13th time in the past thirty-eight weeks…our imports of crude oil fell by an average of 599,000 barrels per day to an average of 5,790,000 barrels per day, after falling by an average of 696,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 829,000 barrels per day to an average of 2,271,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 3,519,000 barrels of per day during the week ending February 11th, 230,000 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 unchanged at 11,600,000 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 15,119,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 14,902,000 barrels of crude per day during the week ending February 11th, an average of 675,000 fewer barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 224,000 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 441,000 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 inserted a (-441,000) 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)….

This week's 224,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 996,336,000 barrels, now the lowest since November 7th, 2008, and therefore at a new 13 year low...this week's oil inventory decrease came as 160,000 barrels per day were being added to our commercially available stocks of crude oil, while 384,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, part of the Biden' administration plan to release 50 million barrels from the SPR to incentivize US gasoline consumption....including other withdrawals from the Strategic Petroleum Reserve under similar programs, a total of 71,319,000 barrels have been removed from the Strategic Petroleum Reserve over the past 18 months, and as a result the 584,828,000 barrels of oil now left in our Strategic Petroleum Reserve is now the lowest since September 20th, 2002, or at yet another new 19 year low, as repeated tapping of our emergency supplies for political reasons or to “pay for” other programs has already drained those supplies considerably over the past dozen years...based on an estimated prepandemic consumption level of around 18 million barrels per day, the US would have roughly 30 1/2 days of oil supply left in the Strategic Petroleum Reserve when the Biden program is complete...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,375,000 barrels per day last week, which was still 9.3% more than the 5,831,000 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 unchanged at 11,600,000 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 Alaska’s oil production was 6,000 barrels per day higher at 461,000 barrels per day but had no impact on the rounded national production total...US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 11.5% below that of our pre-pandemic production peak, but 37.6% 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 85.3% of their capacity while using those 14,902,000 barrels of crude per day during the week ending February 11th, down from a utilization rate of 88.2% the prior week, and lower than the historical utilization rate for early February refinery operations…the 14,902,000 barrels per day of oil that were refined this week were just 0.6% more barrels than the 14,819,000 barrels of crude that were being processed daily during the pandemic impacted week ending February 12th of 2021, and 8.2% less than the 16,210,000 barrels of crude that were being processed daily during the week ending February 14th, 2020, when US refineries were operating at what was then a closer to normal 89.4% of capacity...

With the big decrease in oil being refined this week, gasoline output from our refineries was also much lower, decreasing by 560,000 barrels per day to 8,830,000 barrels per day during the week ending February 11th, after our gasoline output had increased by 740,000 barrels per day over the prior week.…this week’s gasoline production was 2.2% less than the 9,031,000 barrels of gasoline that were being produced daily over the same week of last year, and 7.3% less than the gasoline production of 9,525,000 barrels per day during the week ending February 14th, 2020....at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 244,000 barrels per day to 4,455,000 barrels per day, after our distillates output had increased by 97,000 barrels per day over the prior week…with that decrease, our distillates output was 2.6% less than the 4,574,000 barrels of distillates that were being produced daily during the week ending February 12th of 2021, and 8.2% less than the 4,852,000 barrels of distillates that were being produced daily during the week ending February 14th, 2020...

With the big decrease in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the fourth time in the past 12 weeks, decreasing by 1,332,000 barrels to 248,393,000 barrels during the week ending February 11th, after our gasoline inventories had decreased by 1,644,000 barrels over the prior week....our gasoline supplies decreased again this week even though the amount of gasoline supplied to US users decreased by 556,000 barrels per day to 8,570,000 barrels per day, while our imports of gasoline rose by 41,000 barrels per day to 555,000 barrels per day, and while our exports of gasoline rose by 133,000 barrels per day to 439,000 barrels per day…after this week's decrease, our gasoline supplies were 3.9% lower than last February 12th's gasoline inventories of 257,084,000 barrels, and are now about 3% below the five year average of our gasoline supplies for this time of the year…

Meanwhile, with this week's decrease in our distillates production, our supplies of distillate fuels decreased for the seventeenth time in twenty-four weeks, falling by 1,552,000 barrels to a twenty six month low of 120,262,000 barrels during the week ending February 11th, after our distillates supplies had decreased by 930,000 barrels during the prior week….our distillates supplies fell again this week as the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 25,000 barrels per day to 4,321,000 barrels per day, and as our exports of distillates fell by 182,000 barrels per day to 794,000 barrels per day, while our imports of distillates fell by 3,000 barrels per day to 437,000 barrels per day....after thirty-one inventory decreases over the past forty-five weeks, our distillate supplies at the end of the week were 23.7% below the 157,684,000 barrels of distillates that we had in storage on February 12th of 2021, and about 19% below the five year average of distillates inventories for this time of the year…

Meanwhile, after the drop in our oil exports, the pullback in our oil refining, and a big withdrawal of oil from our Strategic Petroleum Reserve, our commercial supplies of crude oil in storage rose for the 10th time in 28 weeks and for the 19th time in the past year, increasing by 1,121,000 barrels over the week, from 410,387,000 barrels on February 4th to 411,508,000 barrels on February 11th, after our commercial crude supplies had decreased by 4,756,000 barrels over the prior week…after this week’s increase, our commercial crude oil inventories remained about 10% below the most recent five-year average of crude oil supplies for this time of year, but were still about 28% above the average of our crude oil stocks as of second weekend of February 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 spring 2020 and remained elevated for most of a year after that, our commercial crude oil supplies as of this February 11th were 10.9% less than the 461,757,000 barrels of oil we had in commercial storage on February 12th of 2021, and are now 7.1% less than the 442,883,000 barrels of oil that we had in storage on February 14th of 2020, and also 9.5% less than the 454,512,000 barrels of oil we had in commercial storage on February 15th of 2019…

Finally, with our inventory of crude oil and our supplies of all products made from oil all 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 the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 12,577,000 barrels this week, from 1,758,364,000 barrels on February 4th to 1,745,787,000 barrels on February 11th....that leaves our total supplies of oil & its products now at the lowest since May 2nd, 2014, or at a new seven and a half year low, despite the recent near record increase in gasoline inventories.... 

This Week's Rig Count

The number of drilling rigs running in the US increased for the 63nd time over the past 74 weeks during the week ending February 18th, but were still 18.7% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by ten to 645 rigs this past week, which was also 248 more rigs than the pandemic hit 397 rigs that were in use as of the February 19th report of 2021, but was still 1,284 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 market with oil in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 4 to 520 oil rigs during this week, after oil rigs had increased by 19 during the prior week, and there are now 215 more oil rigs active now than were running a year ago, even as they still amount to just 32.3% of the shale era 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 jumped by 6 rigs to 124 natural gas rigs, which was the largest increase in natural gas rigs since May 19th, 2017, also up by 33 natural gas rigs from the 91 natural gas rigs that were drilling during the same week a year ago, but still only 7.7% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition, Baker Hughes continues to list a rig drilling vertically for a well intended to store CO2 emissions in Mercer county North Dakota as 'miscellaneous', which thus matches the 'miscellaneous' rig count of 1 a year ago

The offshore Gulf of Mexico rig count was down by four to twelve rigs this week, with eleven of this week's Gulf rigs drilling for oil in Louisiana waters and another rig drilling for oil in Alaminos Canyon, offshore from Texas....that's down from the 16 offshore rigs that were active in the Gulf a year ago, when 14 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters…since there is not any drilling off our other coasts at this time, nor was there a year ago, those Gulf rig counts are equal to the national offshore totals for both years....

In addition to those rigs offshore, we now have 3 water based rigs drilling inland; one is a horizontal rig targeting oil at a depth of between 5000 and 10,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, another is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area, while the new  inland waters rig added this week is a directional rig targeting oil at a depth of between 10,000 and 15,000 feet in St. Mary Parish, Louisiana... this week's inland waters rig count of three is up by two from the single inland waters rig that was deployed a year ago..

The count of active horizontal drilling rigs was up by 15 to 589 horizontal rigs this week, which was also 232 more rigs than the 357 horizontal rigs that were in use in the US on February 19th of last year, but still 57.1% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014....on the other hand, the vertical rig count was down by 3 rigs to 25 vertical rigs this week, which was still one more than the 25 vertical rigs that were operating during the same week a year ago…at the same time, the directional rig count was down by 2 to 31 directional rigs this week, but those were still up by 15 from the 16 directional rigs that were in use on February 12th of 2021….

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 February 18th, the second column shows the change in the number of working rigs between last week’s count (February 11th) and this week’s (February 18th) count, the third column shows last week’s February 11th 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 19th of February, 2021...

with much of this week's activity centered around Texas, we'll start by checking the Rigs by State file at Baker Hughes for the changes in that state, where we find that three rigs were added in Texas Oil District 8, which encompasses the core Permian Delaware, and that another rig was added in Texas Oil District 7C, which includes the counties of the southern ​part of the ​Permian Midland...since that adds up to fours rigs and the Permian rig count was up by five, that means that at least one of the rigs ​that was ​added in New Mexico was targeting the Permian, and that one of those rigs ​added ​in the Permian basin region of Texas or New Mexico ​this weekl ​was not targeting the Permian...if you really need to know where those were, you can compare the 306 Permian well records for this week and the 301 Permian well records for last week in the North America Rotary Rig Count Pivot Table (Excel) and find out where the change occurred...

elsewhere in Texas, there was one rig added in Texas Oil District 2, and two more rigs added in Texas Oil District 3, any of which could have been targeting the Eagle Ford shale...since the Eagle Ford saw two oil rigs pulled out this week while two natural gas rigs were added, some combination of the changes in those two districts, and / or DIstricts 1 & 4, and / or of the three rigs being pulled out of in those districts not targeting the Eagle Ford has to account for those changes; again, check the North America Rotary Rig Count Pivot Table (Excel) for the offsetting changes which don't show up in the totals..

Texas also saw two rigs added in Texas Oil District 6, which accounts for two of the natural gas rig additions in the Haynesville shale...there were also at least two natural gas rig additions in the Haynesville shale of northern Louisiana, and since the 4 rig increase in the Haynesville this week includes 5 new natural gas rig additions offset by the shutdown of an oil rig, that offsetting activity had to have occurred in one of those two states (again, the Haynesville details by county would be in that Pivot Table)...despite those Haynesville shale additions and the new inland waters rig in St. Mary Parish, Louisiana's rig count was still down by one after the removal of four rigs from the state's offshore waters..

other natural gas rig changes this week included rig additions in Oklahoma's Arkoma Woodford, which also has two oil rigs running, and Pennsylvania's Marcellus, which in turn were offset by the removal of a gas rig from Ohio's Utica shale, and two natural gas rig removals from basins that Baker Hughes doesn't track...other ​rig ​changes around the country include the addition of two oil rigs in Colorado's DJ Niobrara chalk, the addition of an oil rig in Oklahoma's Cana Woodford, the removal of the last oil rig from Oklahoma's Mississippian limestone, and the removal of a rig from a Wyoming basin that Baker Hughes doesn't track...

DUC well report for January

Monday of the past week saw the release of the EIA's Drilling Productivity Report for February, which includes the EIA's January data on 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 20th consecutive month in January, as both completions of drilled wells and drilling of new wells increased, but remained well below average pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 191 wells, falling from 4,657 DUC wells in December to 4,466 DUC wells in January, which was the lowest number of US wells left uncompleted since January 2014, and also 40.0% fewer DUCs than the 7,449 wells that had been drilled but remained uncompleted as of the end of January of a year ago...this month's DUC decrease occurred as 710 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during January, up from the 686 wells that were drilled in December, while 901 wells were completed and brought into production by fracking​ them​, up by just 2 from the 899​ well​ completions seen in December, but up by 170  from the pandemic hit 731 completions seen in January of last year....at the January completion rate, the 4,466 drilled but uncompleted wells left at the end of the month represents a 5.0 month backlog of wells that have been drilled but are not yet fracked, down from the 5.1 month DUC well backlog of a month ago, and the lowest backlog since December 2014, despite a completion rate that is still more than 20% below 2019's pre-pandemic average...

once again, both oil producing regions and natural gas producing regions saw DUC well decreases in January, while none of the major basins covered by this report reported a DUC well increase....the number of uncompleted wells remaining in the Permian basin of west Texas and New Mexico decreased by 89, from 1,444 DUC wells at the end of December to 1,355 DUCs at the end of January, as 320 new wells were drilled into the Permian basin during January, while 409 wells in the region were being fracked...at the same time, DUCs in the Eagle Ford shale of south Texas decreased by 28, from 685 DUC wells at the end of December to a record low of 657 DUCs at the end of January, as 72 wells were drilled in the Eagle Ford during December, while 100 already drilled Eagle Ford wells were completed....in addition, there was also a decrease of 27 DUC wells in the Bakken of North Dakota, where DUC wells fell from 464 at the end of December to a record low of 437 DUCs at the end of January, as 46 wells were drilled into the Bakken during January, while 73 of the drilled wells in the Bakken were being fracked....meanwhile, the number of uncompleted wells remaining in Oklahoma's Anadarko basin decreased by 12, falling from 773 at the end of December to 761 DUC wells at the end of January, as 54 wells were drilled into the Anadarko basin during January, while 66 Anadarko wells were completed.....in addition, DUC wells in the Niobrara chalk of the Rockies' front range decreased by 9, falling from 354 at the end of December to a record low of 345 DUC wells at the end of January, as 88 wells were drilled into the Niobrara chalk during January, 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 23 wells, from 565 DUCs at the end of December to a record low of 542 DUCs at the end of January, as 75 wells were drilled into the Marcellus and Utica shales during the month, while 98 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 three wells to 369 DUCs, as 55 wells were drilled into the Haynesville during January, while 58 of the already drilled Haynesville wells were fracked during the same period....thus, for the month of January, 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 165 wells to 3,555  DUC wells, while the uncompleted well count in the major natural gas basins (the Marcellus, the Utica, and the Haynesville) decreased by 26 wells to 911 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

Sunday, February 13, 2022

oil supplies at a 10 year low; total supplies at 7 1/2 year low; global oil shortage at 440,000 bpd; rigs jump most in 4 years

oil prices settle at a new seven year high, oil supplies fall to new 10 year low with SPR at a 19 year low; total oil & products supplies at 7 1/2 year low after across the board inventory draw; global oil shortage at 440,000 barrels per day in January as OPEC’s output falls 749,000 barrels per day short; 2021 shortage revised to 1.5 million barrels per day; US drilling rigs jump most in 48 months

oil prices rose for an eighth straight week and established a fourth consecutive 7 year high after the White House advised that a Russian invasion of Ukraine was imminent.. after rising 6.3% to $92.31 a barrel last week following OPEC's decision to limit their March production increase and on fears of production well freeze-offs, the contract price for US light sweet crude for March delivery opened 49 cents lower on Monday as progress in the Iran nuclear talks raised the specter that up to 2 million barrels per day of their supplies could return to the global oil market, and settled 99 cents lower at $91.32 a barrel as the prospect of an Iran deal offset bullish sentiment on rising consumption across industrialized countries and ongoing supply constraints from the OPEC+ alliance... oil extended Monday's losses into early trading Tuesday, as fears of easing geopolitical risks increased with the partial lifting of Iranian sanctions on civilian nuclear projects ahead of multinational talks in Vienna, and continued to tumble to settle $1.96, or more than 2% lower at $89.36 a barrel, amid a one-two punch of easing geopolitical tensions across the Ukraine-Russian border and reported progress in Iranian nuclear talks in Vienna....oil prices stabilized early Wedneday after Tuesday night's API report of across-the-board inventory draws, and then surged to over $90 after the weekly EIA report ​also ​showed across-the-board draws from U.S. stockpiles​, and that ​US ​refiners had boosted crude throughputs to meet stronger fuel demand, before settling with a modest 30 cent gain to $89.66 a barrel as the prospect of increased supply from Iran and the US kept pressure on the market...oil prices jumped more than $2 early Thursday as traders weighed the possibility of an aggressive Fed response to new data showing annual inflation at a 40 year high, but settled just 22 cents higher at $89.88 a barrel as the inflation increase was also seen sapping US growth.. oil prices then spiked to nearly $95 a barrel Friday, after US National Security Adviser Jake Sullivan told a White House media briefing that a Russian attack on Ukraine could happen by next week and would likely begin with an air assault, before​ prices​ back​tracked but still settl​ed ​with a gain of $3.22 at $93.10 a barrel after the International Energy Agency raised its 2022 demand forecast and expects global demand to expand by 3.2 million barrels per day (bpd) this year, reaching an all-time record 100.6 million bpd....with that ​big Friday ​gain, US crude prices managed a 0.9% increase on the week and settled at another 7 ​​year ​closing ​high..

on the other hand, natural gas prices finished lower for a second week as temperature forecasts continued to moderate throughout the week...after falling 1.4% to $4.572 per mmBTU last week as traders looked past the ongoing winter storm to warmer forecasts ahead, the contract price of natural gas for March delivery opened 4% lower on Monday and tumbled 34 cents, or more than 7% to $4.232 per mmBTU, as output recovered from last week's freeze-offs and on forecasts for lower heating demand over the next two weeks than was previously expected...natural gas prices rose as much as 15 cents early Tuesday as weather models showed a shot of chilly air hitting the eastern half of the country this weekend through early next week, but ultimately just settled 1.6 cents higher at $4.248 per mmBTU....natural gas prices headed south on rising temperatures and waning supply concerns on Wednesday and settled 23.9 cents or more than 5% lower at a two week low of $4.009 per mmBTU, and then fell 5.0 cents ​more ​to a three week low on Thursday despite a massive storage draw last week that was much bigger than usual for a fourth week in a row...natural gas prices slipped again on Friday, edging down 1.8 cents to another 3 week low of $3.941 per mmBTU, as a steadily warming February forecast proved too much for bulls to overcome and thus finished 13.8% lower on the week...

The EIA's natural gas storage report for the week ending February 4th indicated that the amount of working natural gas held in underground storage in the US fell by 222 billion cubic feet to 2,101 billion cubic feet by the end of the week, which left our gas supplies 441 billion cubic feet, or 17.3% below the 2,542 billion cubic feet that were in storage on February 4th of last year, and 215 billion cubic feet, or 9.3% below the five-year average of 2,316 billion cubic feet of natural gas that have been in storage as of the 4th of February over the most recent five years....the 222 billion cubic foot withdrawal from US natural gas working storage for the cited week was close to the average forecast for a 221 billion cubic foot withdrawal expected by an S&P Global Platts survey of analysts, but was more than the 174 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and also quite a bit more than the average withdrawal of 150 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 February 4th indicated that after a drop in our oil imports, a jump in our oil exports, and an increase in our refining, we again had to pull oil out of our stored commercial crude supplies for the ninth time in 11 weeks and for the 25th time in the past thirty-seven weeks….our imports of crude oil fell by an average of 696,000 barrels per day to an average of 6,389,000 barrels per day, after rising by an average of 849,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 724,000 barrels per day to an average of 3,100,000 barrels per day during the week, which together meant that our effective trade in oil worked out to a net import average of 3,289,000 barrels of per day during the week ending February 4th, 1,420,000 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 higher at 11,600,000 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 14,889,000 barrels per day during the cited reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,577,000 barrels of crude per day during the week ending February 4th, an average of 328,000 more barrels per day than the amount of oil than our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net of 879,000 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 191,000 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 inserted a (-191,000) 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 last week’s EIA fudge factor was at (-1,377,000) barrels per day, that means there was still a 1,185,000 barrel per day difference between this week's balance sheet error and 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 completely worthless.....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 879,000 barrel per day decrease in our overall crude oil inventories left our total oil supplies at 997,902,000 barrels, the lowest since December 12th, 2011, and therefore at a new 10 year low...this week's oil inventory decrease came as 679,000 barrels per day were being pulled out of our commercially available stocks of crude oil, while 200,000 more barrels per day of oil were being pulled out of our Strategic Petroleum Reserve, part of the first installment of Biden's plan to release 50 million barrels from the SPR to incentivize US gasoline consumption....including the drawdowns from the Strategic Petroleum Reserve under such politically motivated programs, a total of 68,634,000 barrels have been removed from the Strategic Petroleum Reserve over the past 18 months, and as a result the 587,515,000 barrels of oil left in our Strategic Petroleum Reserve is now the lowest since October 4th, 2002, or at yet another new 19 year low, as repeated tapping of our emergency supplies for political reasons or to “pay for” other programs had already drained those supplies considerably over the past dozen years...based on an estimated prepandemic consumption level of around 18 million barrels per day, the US will have roughly 30 1/2 days of oil supply left in the Strategic Petroleum Reserve when the Biden program is complete...

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,614,000 barrels per day last week, which was 12.7% more than the 5,868,000 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 11,600,000 barrels per day even though the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,100,000 barrels per day, because Alaska’s oil production was 12,000 barrels per day higher at 456,000 barrels per day and therefore added 100,000 barrels per day to the rounded national production total (by the EIA's math)...US crude oil production had reached a pre-pandemic high of 13,100,000 barrels per day during the week ending March 13th 2020, so this week’s reported oil production figure was 11.5% below that of our pre-pandemic production peak, but 37.6% 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 88.2% of their capacity while using those 15,577,000 barrels of crude per day during the week ending February 4th, up from a utilization rate of 86.7% the prior week, but a bit lower than the historical utilization rate for early February refinery operations…the 15,577,000 barrels per day of oil that were refined this week were 5.3% more barrels than the 14,793,000 barrels of crude that were being processed daily during the pandemic impacted week ending February 5th of 2021, but still 2.8% less than the 16,020,000 barrels of crude that were being processed daily during the week ending February 7th, 2020, when US refineries were operating at what was then also a below normal 87.5% of capacity...

With the big increase in oil being refined this week, gasoline output from our refineries was also much higher, increasing by 740,000 barrels per day to 8,650,000 barrels per day during the week ending February 4th, after our gasoline output had decreased by 267,000 barrels per day over the prior week.…this week’s gasoline production was 8.5% more than the 8,656,000 barrels of gasoline that were being produced daily over the same week of last year, and 1.6% more than the gasoline production of 9,241,000 barrels per day during the week ending February 7th, 2020....at the same time, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 97,000 barrels per day to 4,699,000 barrels per day, after our distillates output had decreased by 148,000 barrels per day over the prior week…after that increase, our distillates output was fractionally more than the 4,660,000 barrels of distillates that were being produced daily during the week ending February 5th of 2021, but 2.9% less than the 4,837,000 barrels of distillates that were being produced daily during the week ending January 31st, 2020...

Even with the increase in our gasoline production, our supplies of gasoline in storage at the end of the week fell for the third time in the past 11 weeks, decreasing by 1,644,000 barrels to 248,393,000 barrels during the week ending February 4th, after our gasoline inventories had increased by a near record 27,378,000 barrels over the prior five weeks....our gasoline supplies decreased this week because the amount of gasoline supplied to US users increased by 900,000 barrels per day to 9,126,000 barrels per day, even as our imports of gasoline rose by 81,000 barrels per day to 514,000 barrels per day, and as our exports of gasoline fell by 334,000 barrels per day to 306,000 barrels per day…after this week's decrease, our gasoline supplies were 3.1% lower than last February 5th's gasoline inventories of 256,412,000 barrels, and are now about 3% below the five year average of our gasoline supplies for this time of the year…

Meanwhile, despite this week's increase in our distillates production, our supplies of distillate fuels decreased for the seventeenth time in twenty-four weeks, falling by 930,000 barrels to 121,814,000 barrels during the week ending February 4th, after our distillates supplies had decreased by 2,410,000 barrels during the prior week….our distillates supplies fell again this week even though the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 373,000 barrels per day to 4,296,000 barrels per day, because our exports of distillates rose by 449,000 barrels per day to 976,000 barrels per day, while our imports of distillates rose by 190,000 barrels per day to 440,000 barrels per day....after thirty inventory decreases over the past forty-four weeks, our distillate supplies at the end of the week were 24.4% below the 161,106,000 barrels of distillates that we had in storage on February 5th of 2021, and about 19% below the five year average of distillates inventories for this time of the year…

Meanwhile, drop in our oil imports, a jump in our oil exports, and an increase in our refining, our commercial supplies of crude oil in storage fell for the 18th time in 27 weeks and for the 34th time in the past year, decreasing by 4,756,000 barrels over the week, from 415,143,000 barrels on January 28th to a 39 month low of 410,387,000 barrels on February 4th, after our commercial crude supplies had decreased by 1,047,000 barrels over the prior week…after this week’s decrease, our commercial crude oil inventories fell to about 11% below the most recent five-year average of crude oil supplies for this time of year, but were still about 28% above the average of our crude oil stocks as of first weekend of February 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 spring 2020 and remained elevated for most of a year after that, our commercial crude oil supplies as of this February 4th were 12.5% less than the 469,014,000 barrels of oil we had in commercial storage on February 5th of 2021, and are now 7.2% less than the 442,468,000 barrels of oil that we had in storage on February 7th of 2020, and also 8.9% less than the 450,840,000 barrels of oil we had in commercial storage on February 8th of 2019…

Finally, with our inventory of crude oil and our supplies of all products made from oil all 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 the total of our oil and oil product inventories, including those in the Strategic Petroleum Reserve and those held by the oil industry, and thus including everything from gasoline and jet fuel to propane/propylene and residual fuel oil, fell by 9,449,000 barrels this week, from 1,767,813,000 barrels on January 28th to1,758,364,000 barrels on February 4th....that leaves our total supplies of oil & its products now at the lowest since May 30th, 2014, or at a fresh seven and a half year low, despite the recent near record increase in gasoline inventories....

OPEC's January Oil Market Report

Thursday of th​e past week saw the release of OPEC's February Oil Market Report, which includes ​details on ​OPEC & global oil data for January, and hence it gives us a picture of the global oil supply & demand situation for the sixth month after 'OPEC+' agreed to increase their output by 400,000 barrels per day each month from the previously agreed to July level, which was in turn part of the fifth production quota policy reset that they've made over the past twenty months, all in response to the pandemic-related slowdown and subsequent irregular recovery....with US Omicron infections apparently subsiding at the time of this report, we need to again caution that the global oil demand estimates made by OPEC herein, while the eventual global course of the Covid-19 pandemic still remains uncertain, 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 review is from the page numbered 46 of this month's report (pdf page 56), 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 64,000 barrels per day to 27,981,000 barrels per day during January, up from their revised December production total which averaged 27,918,000 barrels per day....however, that December output figure was originally reported as 27,882,000 barrels per day, which therefore means that OPEC's December production was revised 36,000 barrels per day higher with this report, and hence OPEC's January production was, in effect, a 100,000 barrel per day increase from the previously reported OPEC production figure (for your reference, here is the table of the official December 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, 2021, the oil producers party to that agreement were to raise their output by a total of 400,000 barrels per day each month through December, which was subsequently renewed to include another 400,000 barrel per day production increase in January,and which would include an increase of 254,000 barrels per day from the OPEC members listed above ...but as we can see from the above table, OPEC's increase of 64,000 barrels per day was far short of that...the apparent reasons for their production shortfall in January were the 51,000 barrel per day decrease in Venezuela's output, the 45,000 barrel per day decrease in Libya's output, the 27,000 barrel per day decrease in Iraq's output, and to a lesser extent the production decreases by Congo and Gabon...while we knew that Libyan production has frequently been disrupted by ​episodes of ​civil strife and that Iraq's output was interrupted by an explosion on a key export pipeline to Turkey, it turns out that Venezuela was unable to meet their quota because a shipment of Iranian condensate, which it uses to blend its extra-heavy crude, did not arrive in January, forcing a production shutdown....

Recall that the original 2020 oil producer's agreement was to cut oil 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 2020, but that initial 9.7 million bpd production cut agreement was 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 that 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 their January 2021 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 a cut of 7.2 million barrels per day from that original​ 2018​ baseline...then, during a difficult meeting on April 1st of last year, OPEC and the other oil producers that are aligned with them agreed to incrementally adjust their oil production higher each month by ​a pre-set amount over the following three months, thus extending 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 OPEC meeting, but that meeting was adjourned on July 2nd due to a dispute between the UAE and the Saudis over the 2018 reference production levels, and a subsequent attempt to restart that meeting on July 5th was called off....so it wasn't until July 18th 2021 that a tentative compromise addressing August's output 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 following months, and also to boost reference production levels for the UAE, the Saudis, Iraq and Kuwait beginning in April 2022....OPEC and other producers then agreed to increase their production in January 2022 by a further 400,000 barrels per day in a meeting concluded on the 2nd of December, 2021, and reaffirmed their intention to continue that policy with another 400,000 barrel per day increase in February at a meeting concluded January 4, 2022, and then agreed to stick to that 400,000 bpd oil output increase in March, despite pressure from the US to raise output more quickly, at a meeting on February 2nd, a little over a week ago...

Hence OPEC arrived at the production quotas for August 2021 through March of this year by repeatedly readjusting 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 oil 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 last year....under the agreement prior to the current one, OPEC's production cut in April 2021 was set at 4,564,000 barrels per day below the October 2018 baseline, which was lowered to a cut of 3,650,000 barrels per day from the baseline with the prior comprehensive 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 thiat agreement....for OPEC and the other producers to increase their output by 400,000 barrels per day from that July 2021 level, each producer would be allowed to initially increase their production by just over 1% per month...for the ten members of OPEC who agreed to impose production cuts on themselves, that would mean their August output quota would be roughly 23,277,000 barrels per day, then 23,531,000 barrels per day in September, then roughly 23,786,000 barrels per day in October, then 24,041,000 barrels per day in November, then 24,296,000 barrels per day in December, and finally to 24,551,000 barrels per day in January ...therefore, the 23,802,000 barrels those 10 OPEC members actually produced in January were 749,000 barrels per day short of what they were expected to produce during the month, with Nigeria, Angola, and the Saudis accounting for most of this month's shortfall....

The next graphic from this month's report that we'll ​look at shows us both OPEC's and worldwide oil production monthly on the same graph, over the period from February 2020 to January 2022, and it comes from page 47 (pdf page 57) of OPEC's February 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 modest 64,000 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 710,000 barrels per day to average 98.69 million barrels per day in January, a reported increase which came after December's total global output figure was apparently revised down by 530,000 barrels per day from the 98.51 million barrels per day of global oil output that was estimated for December a month ago, as non-OPEC oil production rose by a rounded 650,000 barrels per day in January after that downward revision, with 80,000 barrels per day of the increase coming from OECD countries, primarily Norway and the UK, while non-OECD countries increased their output by 530,000 barrels per day, predominantly driven by production increases from Russia, Ecuador and Brazil... note that the graph above now shows a decline in December's global production, whereas a month ago OPEC had reported an 650,000 barrels per day global production increase for the month

After that increase in January's global output, the 98.69 million barrels of oil per day that were produced globally during the month were 5.10 million barrels per day, or 5.4 more than the revised 93.59 million barrels of oil per day that were being produced globally in January a year ago, which was the initial month that OPEC and their allied producers agreed to reduce their output cuts by 500,000 barrels per day from the 7.7 million barrels per day production cut that they applied to the last 5 months of 2020 (see the February 2021 OPEC report (online pdf) for the originally reported January 2021 details)...with this month's relatively small increase in OPEC's output, their January oil production of 27,981,000 barrels per day amounted to 28.4% of what was produced globally during the month, down from their 28.5% revised share of the global total in December....OPEC's January 2021 production was reported at 25,496,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 2,485,000 barrels per day, or 9.7% more barrels per day of oil this January than what they produced a year earlier, when they accounted for 27.4% 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 still fell a bit 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 February Oil Market Report (pdf page 37), and it shows regional and total oil demand estimates in millions of barrels per day for 2021 in the first column, and then OPEC's estimate of oil demand by region and globally quarterly over 2022 over the rest of the table...on the "Total world" line in the second column, we've circled in blue the figure that's relevant for January, which is their estimate of global oil demand during the first quarter of 2022....OPEC is estimating that during the 1st quarter of this year, all oil consuming regions of the globe will be using an average of 99.13 million barrels of oil per day, and ​that oil consumers ​will be using 100.80 barrels per day over the entire year, ​now ​indicating a level of demand above that of 2019, when global demand averaged 99.98 million barrels per day....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 98.69 million barrels million barrels per day during January, which would imply that there was a modest shortage of around 440,000 barrels per day in global oil production in January when compared to the demand estimated for the month..

Also note on the table above that we've circled in green a small upward revision of 10,000 barrels per day to the demand figure for last year...a separate table on page 26 of tths months Oil Market Report indicates that was due to a 20,000 barrels per day upward revision to the demand figure for the fourth quarter of 2021, and a 30,000 barrels per day upward revision to the demand figure for the third quarter of 2021, which thus means that the supply shortfalls or surpluses that we previously reported for those quarters of last year would need to be revised....a month ago we estimated that there was a shortage of around 1,240,000 barrels per day in global oil production in December, based on the figures that were published at that time...however, as we saw earlier, December's global output figure was revised down by 530,000 barrels per day from those figures, while global demand for the 4th quarter of 2021 has now been revised 20,000 barrels per day higher, so with those revised figures, we now find that global oil production in December was running roughly 1,7​90,000 barrels per day short of demand... 

In addition to figuring the December oil shortage that's indicated by this report, the upward revision of 20,000 barrels per day to 4th quarter demand we've noted above means that the 1,890,000 barrels per day global oil output shortage we had previously figured for November would now be revised to an oil shortage of 1,910,000 barrels per day...likewise, the upward revision of 20,000 barrels per day to 4th quarter demand noted above means that the 2,350,000 barrels per day global oil output shortage we had previously figured for October would now be revised to an oil shortage of 2,370,000 barrels per day...

As we previously mentioned, there was also a upward revision of 30,000 barrels per day to the third quarter's demand....that means that the 1,600,000 barrels per day global oil output shortage we had previously figured for September would now be revised to a shortage of 1,630,000 barrels per day....in like manner, the 30,000 barrels per day upward revision to 3rd quarter demand means that the shortage of 2,110,000 barrels per day we had previously figured for August would now be revised to a shortage of 2,140,000 barrels per day, and that the shortage of 1,690,000 barrels per day barrels per day we had previously figured for July would have to be revised to a shortage of 1,720,000 barrels per day...

After those revisions to our oil shortage estimates for the last 6 months of 2021, we should also go back and revise our estimate of the oil supply shortage for ​all ​last year...a month ago, we had listed our revised estimates for each month of last year based on the 12 monthly oil market reports that OPEC released over the year, and the monthly revisions to the supply and demand figures therein, and we found that the world was short 527,910,000 barrels of oil in 2021, which worked out to a shortage of 1,446,300 barrels of oil per day...with January's revisions, we now find that the world was short 5​48,940,000 barrels of oil in 2021, which works out to a shortage of 1,50​3,950 barrels of oil per day....​despite that, ​we're still far from running out, because the quantities of oil being produced globally during the pandemic of 2020 still averaged over 3 million barrels per day more than anyone wanted....

This Week's Rig Count

The number of drilling rigs running in the US increased for the 62nd time over the past 73 weeks during the week ending February 11th, and by the most since February 9th 2018, but were still 19.9% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US increased by twenty-two to 635 rigs this past week, which was also 238 more rigs than the pandemic hit 397 rigs that were in use as of the February 12th report of 2021, but was still 1,294 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 market with oil in an attempt to put US shale out of business….

The number of rigs drilling for oil was up by 19 to 516 oil rigs during this week, after they had increased by 2 oil rigs during the prior week, and there are now 210 more oil rigs active now than were running a year ago, even as they still amount to just 32.1% of the shale era 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 118 natural gas rigs, which was also up by 28 natural gas rigs from the 90 natural gas rigs that were drilling during the same week a year ago, but still only 7.3% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…this week also saw the startup of a new rig drilling vertically in Mercer county North Dakota that Baker Hughes has classified as 'miscellaneous', which i'm told is for a well intended to store CO2 emissions from an area ethanol plant...​.​that lone 'miscellaneous' rig thus matches to the 'miscellaneous' rig count of 1 a year ago

The Gulf of Mexico rig count was unchanged at 16 rigs this week, with fifteen of this week's Gulf rigs drilling for oil in Louisiana waters and another rig drilling for oil in Alaminos Canyon, offshore from Texas....that's down from the 17 Gulf rigs that were active in the Gulf a year ago, when 15 Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil in Texas waters…since there is not any drilling off our other coasts at this time, nor was there a year ago, those Gulf rig counts are equal to the national offshore totals for both years....

In addition to those rigs offshore, we also have 2 water based rigs drilling inland; one is a horizontal rig targeting oil at a depth of between 5000 and 10,000 feet, drilling from an inland body of water in Plaquemines Parish, Louisiana, near the mouth of the Mississippi, and the other is a directional rig drilling for oil at a depth of over 15,000 feet in the Galveston Bay area... this week's inland waters rig count of two is up by one from the single inland waters rigs that was deployed a year ago..

The count of active horizontal drilling rigs was up by 19 to 574 horizontal rigs this week, which was also 218 more rigs than the 356 horizontal rigs that were in use in the US on February 12th of last year, but still 58.2% less than the record 1,374 horizontal rigs that were drilling on November 21st of 2014....at the same time, the vertical rig count was up by 4 rigs to 28 vertical rigs this week, which was also up by 5 from the 23 vertical rigs that were operating during the same week a year ago…on the other hand, the directional rig count was down by 1 to 33 directional rigs this week, but those were still up by 15 from the 18 directional rigs that were in use on February 12th of 2021….

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 February 11th, the second column shows the change in the number of working rigs between last week’s count (February 4th) and this week’s (February 11th) count, the third column shows last week’s February 4th 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 12th of February, 2021...

with a 22 rig increase, we may​ not​ find details on all of them, but we'll start by checking the Rigs by State file at Baker Hughes for changes in Texas, where we find that two rigs were added in Texas Oil District 8, which encompasses the core Permian Delaware, that four rigs were added in Texas Oil District 7C, which includes the counties of the southern Permian Midland, and that two more rigs were added in Texas Oil District 7B, which includes a couple counties in the far eastern Permian Midland...since that adds up to eight new rigs and the Permian rig count was only up by seven, and since there were no changes evident in New Mexico, that means that one of those rigs in the Permian basin region of Texas was not targeting the Permian..

elsewhere in Texas, there were two rigs added in Texas Oil District 1, another rig added in Texas Oil District 2, yet another rig added in Texas Oil District 3, and also a rig added in Texas Oil District 4 at the same time, any four of which would account for the 4 rig increase in the Eagle Ford shale...since the Eagle Ford saw a natural gas rig pulled out​ this week​ while 5 oil rigs were added, that means one of those districts had an offsetting change which doesn't show up in the totals..

meanwhile, the three rigs added in North Dakota were all in the Williston basin, but as we mentioned earlier, one was drilling a well for carbon capture & storage... in Oklahoma, oil rigs added to the Arkoma Woodford and the Ardmore Woodford account for 2 of the state's 3 rig increase, while another rig was added elsewhere in the state targeting a basin that Baker Hughes doesn't track...there were also two rigs added in Utah targeting oil in the Uintah basin, which Baker Hughes doesn't track, and a rig pulled out from southern Louisiana, also from a basin which Baker Hughes doesn't track...

for rigs targeting natural gas, ​there were three added in Pennsylvania's Marcellus, while a natural gas rig was removed from West Virginia's Marcellus​ ​at the same time​...there was also a natural gas rig ​added in a basin not identified by Baker Hughes​, while a natural gas ​was pulled out of the Eagle Ford, ​where 7 gas rigs and 47 oil rigs remain active..

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note: there’s more here