global oil production exceeded demand by 390,000 barrels per day in November; despite OPEC production that was 938,000 barrels per day short of their reduced quota
oil prices partly recovered from last week's drop to a 12 month low after an oil leak shut down the Keystone pipeline supplying diluted Canadian bitumen, a replacement for Russian Urals, to US refineries...after falling 11.2% to $71.02 a barrel last week after the EU banned seaborne imports of Russian crude and a G7 price cap on Russian oil kicked in, the contract price for the benchmark US light sweet crude for January delivery rose more than 1% in early Asian trade on Monday as the Keystone pipeline bringing Canadian crude to remained closed while Russian President Putin threatened to cut production in response to the G7 price cap on Russian oil, but slipped in early trading on the NYMEX as traders balanced concerns over the health of the global economy in the coming year against falling supplies from OPEC+ nations, before rallying to close $2.15 or 3% higher at $73.17 a barrel, as traders swooped in to buy oil at the lowest price of the year....oil prices rose sharply early Tuesday to extend Monday's gains amid signs of further easing of China's COVID restrictions, and continued to rally on a steep drop in the US dollar following a CPI report that showed US consumer prices in November rose at the slowest pace since December 2021, solidifying the case for less-aggressive interest rate increases from the Fed, and settled $2.22 higher at a one week high of $75.39 a barrel as the Keystone pipeline remained shut amid what could potentially be one of the coldest of cold snaps in decades...however, oil prices slid after the market closed Tuesday after the API reported a surprisingly big build in crude supplies and opened lower Wednesday, and then tumbled further in early trading after the EPI reported an even more massive crude build, but then reversed and rallied to their highest level in just over a week, supported by the International Energy Agency’s forecasts for stronger demand growth this year and next, and settled $1.89 higher at $77.28 a barrrel, as traders looked beyond the big weekly build in U.S. crude inventories to focus instead on the shutdown of the Keystone pipeline, which is vital to refiners on the country’s coasts...oil prices steadied on Thursday, after TC Energy restarted a section of the Keystone pipeline and the dollar advanced, and then slid about 2% as traders worried about the fuel demand outlook due to a stronger dollar and further interest rate hikes by global central banks and settled $1.17 lower at $76.11 a barrel after softer-than-expected economic data in the United States, China, and Eurozone brought demand concerns back into focus, while traders weighed the impacts of higher borrowing costs next year....oil prices moved lower in early trading on Friday as a bumpy reopening out of China saw the Omicron virus burning through its large cities, with hospital capacity in Beijing and Hong Kong unable to handle the developing crisis, and erased the gains from earlier in the week in sliding by more than 3% as central bankers said much more needed to be done to curb inflation, despite the less aggressive hike rates this week, but trimmed those losses after U.S. Department of Energy announced it would start repurchasing crude oil for the Strategic Petroleum Reserve, in order to replenish our emergency stockpiles, and settled the Friday session $1.82 lower at $74.29 a barrel, but still held on to a gain of 4.6% on the week, even as oil’s comeback rally after its worst week since March had been snuffed out by renewed fears of recession and higher-for-longer interest rates in the U.S. and Europe...
Meanwhile, natural gas prices finished higher for the first time in 3 weeks after a quite volatile week of trading, on the potential for much colder weather for the rest of December... after ending 0.6% lower at $6.245 per mmBTU last week on a delay in the restart of the Freeport LNG export terminal, the contract price of US natural gas for January delivery opened 63 cents or 10% higher on Monday, on colder December forecasts that included the possibility of even more frigid air moving in from Canada, but pulled back as the day drew on and settled 34.2 cents higher at $6.587 per mmBTU, supported by a jump in European gas prices that should keep U.S. LNG exports near record highs.....natural gas prices jumped another 5% on the late December cold forecasts Tuesday, and reached an intraday high at $7.105 per mmBTU, but again pulled back to settle just 34.8 cents higher at $6.935/MMBtu, as warmer trends in the weather models took a hatchet to the early gains...natural gas prices opened 30 cents lower on those weaker weather forecasts Wednesday, and finished down 50.5 cents or 7.3% at $6.430 per mmBTU on expectations for less chilly weather than had been anticipated come late December...however, natural gas prices reversed and jumped 54.0 cents, or 8.4%, to settle at a two-week high of $6.970 per mmBTU on Thursday, on a bigger than expected storage draw, an increase in gas flows to LNG export plants, and a drop in output as extreme cold from North Dakota to Texas caused oil and gas wells to freeze....natural gas futures floundered on Friday amid hints in weather models that Arctic cold blasts, while intense, might not endure as long as earlier forecasts suggested, and settled 37.0 cents lower at $6.600 per mmBTU on the day, but still finished 5.7% higher on the week...
The EIA's natural gas storage report for the week ending December 9th indicated that the amount of working natural gas held in underground storage in the US fell by 50 billion cubic feet to 3,412 billion cubic feet by the end of the week, which meant our gas supplies were 18 billion cubic feet, or 0.5% less than the 3,430 billion cubic feet that were in storage on December 9th of last year, and 15 billion cubic feet, or just 0.4% below the five-year average of 3,427 billion cubic feet of natural gas that were in storage as of the 9th of December over the most recent five years....the 50 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than the average forecast for an 45 billion cubic feet withdrawal by a Reuters poll of analysts, but much less than the 83 billion cubic feet that were pulled from natural gas storage during the corresponding week of 2021, and also much less than the average 93 billion cubic feet of natural gas that have typically been withdrawn from our natural gas storage during the same winter 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 December 9th indicated that after a sizable increase in our oil imports, an increase in the amount of oil released from the SPR, a drop in the amount of oil we were refining, and a near record increase in the amount of oil supplies that could not be accounted for, we had oil left to add to our stored commercial crude supplies for the first time in five weeks and for the 15th time in the past 34 weeks, despite a big increase in our oil exports....Our imports of crude oil rose by an average of 855,000 barrels per day to average 6,867,000 barrels per day, after falling by an average of 24,000 barrels per day during the prior week, while our exports of crude oil rose by 886,000 barrels per day to average 4,316,000 barrels per day, which together meant that the net of our trade in oil worked out to an import average of 2,551,000 barrels of oil per day during the week ending December 9th, 31,000 fewer barrels per day than the net of our imports minus our exports during the prior week.. Over the same period, production of crude from US wells was reported as being 100,000 barrels per day lower at 12,100,000 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 averaged a total of 14,651,000 barrels per day during the December 9th reporting week…
Meanwhile, US oil refineries reported they were processing an average of 16,126,000 barrels of crude per day during the week ending December 9th, an average of 459,000 fewer barrels per day than the amount of oil that our refineries processed during the prior week, while over the same period the EIA’s surveys indicated that a net average of 783,000 barrels of oil per day were being added to the supplies of oil stored in the US. So, based on that reported & estimated data, the crude oil figures from the EIA for the week ending December 9th appear to indicate that our total working supply of oil from net imports and from oilfield production was 2,259,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week. To account for that big, inexplicable disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a (+2,259,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet in order to make the reported data for the daily supply of oil and for the consumption of it balance out, a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting there must have been an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed....moreover, since last week’s EIA fudge factor was at (+762,000) barrels per day, that means there was a 1,497,000 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 changes to supply and demand from that week to this one that are indicated by this week's report are off by that much, rendering those comparisons completely meaningless....however, since most everyone treats these weekly EIA reports as gospel, and since these figures often drive oil pricing, and hence decisions to drill or complete 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 783 ,000 barrel per day increase in our overall crude oil inventories came as an average of 1,462,000 barrels per day were being added to our commercially available stocks of crude oil, while 678,000 barrels per day of oil were being pulled out of our Strategic Petroleum Reserve. That draw on the SPR, the largest since October 7th, was an extension of the emergency withdrawal under Biden's "Plan to Respond to Putin’s Price Hike at the Pump" (sic), that was originally intended to supply 1,000,000 barrels of oil per day to commercial interests over a six month period from its inception to the midterm elections in November, in the hope of keeping gasoline and diesel fuel prices from rising over that time....The SPR withdrawals under that program had been fluctuating in recent weeks because the administration has also been attempting to use the Strategic Petroleum Reserve to manipulate prices on a weekly basis; furthermore, Biden recently announced another 15,000,000 barrel release from the Strategic Petroleum Reserve to run thru December, while simultaneously announcing he'd buy crude to replenish the SPR if oil prices fall to or below the $67-72 a barrel range, effectively putting a floor under oil at that price.....Including the administration's initial 50,000,000 million barrel SPR release earlier this year, their subsequent 30,000,000 barrel release, and other withdrawals from the Strategic Petroleum Reserve under recent release programs, a total of 273,878,000 barrels of oil have now been removed from the Strategic Petroleum Reserve over the past 28 months, and as a result the 382,271,000 barrels of oil that still remain in our Strategic Petroleum Reserve is now the lowest since January 6th, 1984, or nearly a 39 year low, as repeated tapping of our emergency supplies for non-emergencies or to pay for other programs had already drained those supplies considerably over the past dozen years, even before the Biden administration's SPR releases. The total 180,000,000 barrel drawdown of the current release program, now scheduled to run through December, will remove almost a third of what remained in the SPR when the program started, and leave us with what would be less than a 20 day supply of oil at the current consumption rate...
Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,495,000 barrels per day last week, which was 0.1% less than the 6,502,000 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 lower at 12,100,000 barrels per day, even though the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,700,000 barrels per day, because Alaska’s oil production was 7,000 barrels per day lower at 443,000 barrels per day and subtracted 100,000 barrels per day from the rounded national total (EIA 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 still 7.6% below that of our pre-pandemic production peak, but was 24.7% above the pandemic low of 9,700,000 barrels per day that US oil production had fallen to during the third week of February of 2021...
US oil refineries were operating at 92.2% of their capacity while using those 16,126,000 barrels of crude per day during the week ending December 9th, down from their 95.5% utilization rate during the prior week, but still on the high side of normal utilization in early December...The 16,126,000 barrels per day of oil that were refined this week were still 2.9% more than the 15,670,000 barrels of crude that were being processed daily during week ending December 10th of 2021, while 2.6% less than the 16,562,000 barrels that were being refined during the prepandemic week ending December 13th, 2019, when our refinery utilization was at 90.6%, within the normal utilization range for early December ...
Even with the decrease in the amount of oil being refined this week, gasoline output from our refineries was somewhat higher, increasing by 129,000 barrels per day to 9,194,000 barrels per day during the week ending December 2nd, after our gasoline output had decreased by 295,000 barrels per day during the prior week. This week’s gasoline production was still 8.4% less than the 10,042,000 barrels of gasoline that were being produced daily over the same week of last year, and 6.6% below the gasoline production of 9,840,000 barrels per day during the prepandemic week ending December 13th, 2019. On the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 164,000 barrels per day to 5,168,000 barrels per day, after our distillates output had increased by 21,000 barrels per day during the prior week. But even with that decrease, our distillates output was still 7.4% more than the 4,812,000 barrels of distillates that were being produced daily during the week ending December 10th of 2021, and 1.9% more than the 5,072,000 barrels of distillates that were being produced daily during the week ending December 13th 2019...
With the increase in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the 5th week in a row and for the 8th time in 18 weeks, increasing by 4,496,000 barrels to 213,768,000 barrels during the week ending December 9th, after our gasoline inventories had increased by 5,319,000 barrels during the prior week. Our gasoline supplies rose again this week as the amount of gasoline supplied to US users fell by 103,000 barrels per day to 8,255,000 barrels per day, and as our exports of gasoline rose by 191,000 barrels per day to 1,203,000 barrels per day, while our imports of gasoline rose by 271,000 barrels per day to 790,000 barrels per day. After 31 gasoline inventory drawdowns over the past 45 weeks, our gasoline supplies were still 2.3% more than last December 10th's gasoline inventories of 218,585,000 barrels, but about 3% below the five year average of our gasoline supplies for this time of the year…
Even with the decrease in our distillates production, our supplies of distillate fuels increased for the 14th time in 19 weeks, and for the 26th time over the past year, rising by 1,364,000 barrels to 120,171,000 barrels during the week ending December 9th, after our distillates supplies had increased by 6,159,000 barrels during the prior week. Our distillates supplies rose by less this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 218,000 barrels per day to 3,768,000 barrels per day, and because our imports of distillates fell by 95,000 barrels per day to 277,000 barrels per day, and because our exports of distillates rose by 209,000 barrels per day to 1,483,000 barrels per day... But after fifty-two inventory withdrawals over the past eighty-five weeks, our distillate supplies at the end of the week were were still 2.9% below the 123,758,000 barrels of distillates that we had in storage on December 10th of 2021, and about 8% below the five year average of distillates inventories for this time of the year...
Meanwhile, after a big increase in our oil imports, a big release from the SPR, and a slowdown in refining, our commercial supplies of crude oil in storage rose for the 7th time in 18 weeks and for the 21st time in the past year, increasing by 10,231,000 barrels over the week, from 413,898,000 barrels on December 2nd to 424,129,000 barrels on December 9th, after our commercial crude supplies had decreased by 5,194,000 barrels over the prior week. After this week's increase, our commercial crude oil inventories rose to around 6% below the most recent five-year average of crude oil supplies for this time of year, and were around 26% more than the average of our crude oil stocks as of the second weekend of December 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. And after our commercial crude oil inventories had jumped to record highs during the Covid lockdowns of the Spring of 2020, and then jumped again after February 2021's winter storm Uri froze off US Gulf Coast refining, our commercial crude supplies as of this December 2nd were 1.0% less than the 428,286,000 barrels of oil we had in commercial storage on December 10th of 2021, and 15.2% less than the 500,096,000 barrels of oil that we had in storage on December 11th of 2020, and 5.1% less than the 446,833,000 barrels of oil we had in commercial storage on December 13th of 2019…
Finally, with our inventories of crude oil and our supplies of all products made from oil near multi-year lows over the most recent months, we are also continuing to watch the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR....after the big crude, gasoline, distillates inventory increases we've already noted for this week, 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, rose by 9,231,000 barrels this week, from 1,604,208,000 barrels on December 2nd to 1,613,439,000 barrels on December 9th, after our total inventories had increased by 3,776,000 barrels during the prior week. This week's increase still left our total petroleum liquids inventories down by 174,225,000 barrels over the first 49 weeks of this year, and about 0.8% from a new 18 year low...
OPEC's Report on Global Oil for November
Tuesday of this past week saw the release of OPEC's December Oil Market Report, which includes the details on OPEC's & global oil data for November, and hence it gives us a picture of the global oil supply & demand situation during a period when demand for oil was constrained by lockdowns in Beijing and other big cities in China, while oil supplies from Russia continued to be constrained by Western sanctions, even as some buyers of Russian crude had stepped up their purchases in advance of December's European Union ban of Russian oil imports by sea and the G7 price caps....November was also the first month after OPEC and aligned oil producers had imposed a new 2 million barrel per day production cut on the cartel, taking roughly 2% of global oil supply off the market... note that with the course and impact of the Ukraine war and the future course of the Covid pandemic largely unknown, the demand projections made in this report will have a much greater degree of uncertainty than they would have during normal, more stable times...
The first table from this month's report that we'll review is from the page numbered 48 of this month's report (pdf page 60), 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 has used an average of production estimates by six or more "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....since the June report, the consultancy Wood Mackenzie and the research and intelligence firm Rystad Energy were also added to OPEC's secondary sources.....
As we can see on the bottom line of the above table, OPEC's oil output decreased by 744,000 barrels per day to 28,826,000 barrels per day during November, down from their revised October production total that averaged 29,570,000 barrels per day....however, that October output figure was originally reported as 29,494,000 barrels per day, which therefore means that OPEC's October production was revised 76,000 barrels per day higher with this report, and hence OPEC's November production was, in effect, only 668,000 barrels per day lower than the previously reported OPEC production figure (for your reference, here is a copy of the table of the official October OPEC output figures as reported a month ago, before this month's revision)...
while OPEC and other aligned oil producers agreed to reduce production by 2,000,000 barrels per day during November, and while the 744,000 barrels per day production cut we see above obviously is short of that, OPEC's production was already running 1,585,000 barrels per day short of what they were expected to produce during October, so the November production cut still leaves them far short of what they were expected to produce during the month, as we'll see in the next table...
The above table was originally included as a downloadable attachment to the press release following the 32nd OPEC and non-OPEC Ministerial Meeting on October 5th, 2022, which set OPEC's and other aligned oil producers' production quotas for November and the following months through 2023.. since war torn Libya and US sanctioned producers Iran and Venezuela have been exempt from the production cuts imposed by the joint agreement that has governed the output of the other OPEC producers, they are not shown in this list, and OPEC's quota excluding them is aggregated under the total listed for the 'OPEC 10', which you can see was expected to be at 25,416,000 barrels per day in November...therefore, the 24,478,000 barrels those 10 OPEC members actually produced in November were 938,000 barrels per day short of what they were expected to produce during the month, with Nigeria and Angola accounting for the majority 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 December 2020 to November 2022, and it comes from page 49 (pdf page 61) of OPEC's December 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....
Even with this month's 744,000 barrel per day decrease in OPEC's production from their revised production of a month earlier, OPEC's preliminary estimate is that total global liquids production still increased by 43,000 barrels per day to average 101.50 million barrels per day in November, a reported increase which came after October's total global output figure was apparently revised down by 43,000 barrels per day from the 101.50 million barrels per day of global oil output that was reported for October a month ago, as non-OPEC oil production rose by a rounded 800,000 barrels per day in October after that downward revision, with most of November's production growth coming from Eurasia ex-Russia, Asia ex-China and India, and the OECD Europe, which were partially offset by production declines in Latin America...
After that 43,000 barrel per day increase in November's global output, the 101.50 million barrels of oil per day that were produced globally during the month were 3.64 million barrels per day, or 3.7% more than the revised 97.86 million barrels per day that were being produced globally in November a year ago, which was the fourth month of the monthly 400 million barrel per day production increases that OPEC and their allied producers initiated as the fourth policy reset in response to the global demand recovery following the early pandemic lockdowns (see the December 2021 OPEC report (online pdf) for the originally reported November 2021 details)...since this month's bg decrease in OPEC's output contrasts to the modest global increase, their November oil production of 28,826,000 barrels per day amounted to 28.4% of what was produced globally during the month, down from their 29.1% share of the global total in October....OPEC's November 2021 production was originally reported at 27,717,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year still produced 1,109,000 barrels per day, or 4.0% more barrels per day of oil this November than what they produced last November, when they accounted for 28.2% of a smaller global output total...
Even with the big decrease in OPEC's output and the small increase in other global oil output that we've seen in this report, the amount of oil being produced globally during the month was still in excess of the expected global demand, as this next table from the OPEC report will show us....
The above table came from page 26 of the November Oil Market Report (pdf page 38), 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 fifth column, we've circled in blue the figure that's relevant for November, which is their estimate of global oil demand during the fourth quarter of 2022....OPEC is estimating that during the 4th quarter of this year, all oil consuming regions of the globe have been using an average of 101.11 million barrels of oil per day, which is a rounded downward revision of 140,000 barrels per day from their estimate 101.25 million barrels per day for 4th quarter demand of a month ago (revisions are circled in green)...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 producing 101.50 million barrels per day during November, which would imply that there was surplus of around 390,000 barrels per day of global oil production in November, when compared to the demand estimated for the month...
in addition to figuring the November oil surplus implied by this report, the downward revision of 43,000 barrels per day to October's global oil output that's implied in this report, combined with the 140,000 barrel per day downward revision to 4th quarter demand, means that the 250,000 barrels per day global oil output surplus we had previously figured for October would now be revised to surplus of 347,000 barrels per day....
Note on the table above that we've highlighted in green an upward revision of 220,000 barrels per day to the third quarter's demand....that means that the 1,490,000 barrels per day global oil output surplus we had previously figured for September would now be revised to a surplus of 1,270,000 barrels per day....in like manner, 220,000 barrels per day upward revision to 3rd quarter demand means that the surplus of 1,230,000 barrels per day we had previously figured for August would now be revised to a surplus of 1,010,000 barrels per day, and that the surplus of 680,000 barrels per day barrels per day we had previously figured for July would have to be revised to a surplus of 460,000 barrels per day...
Note that in green we have also circled a downward revision of 140,000 barrels per day to OPEC's previous estimates of second quarter demand...based on that downward revision to demand, our previous estimate that there was a surplus of 550,000 barrels per day in June would now be revised to a 690,000 barrels per day surplus, while the oil shortage of 180,000 barrels per day that we had previously figured for May would have to be revised to a shortage of just 40,000 barrels per day, and finally, that the 540,000 barrels per day global oil output surplus we had previously figured for April would have to be revised to a surplus of 680,000 barrels per day...
Also note that in green that we have circled a small downward revision of 10,000 barrels per day to OPEC's previous estimate of first quarter demand, during a period when supply and demand seemed to be closer to being in balance.....so for March, that means that the global oil output surplus of 140,000 barrels per day we had previously figured for March would be revised to a surplus of 150,000 barrels per day, and that the 80,000 barrels per day global oil output shortage we had previously figured for February would now be revised to a shortage of 70,000 barrels per day, and that the global oil output shortage of 830,000 barrels per day we had previously figured for January would now be revised to a shortage of 820,000 barrels per day, in light of that 10,000 barrel per day downward revision to first quarter demand...
You might also note that we have also circled a 20,000 barrel per day downward revision to 2021's demand, circled in orange....while we're not inclined to go back and recompute the figures for each month of last year in light of that revision, we do have an adequate running total for last year supply shortfall from our prior reports such that we can estimate an aggregate revision for the year as a whole...as of the September revision to 2021's demand, we had figured there had an oil shortage for last year of 577,915,000 barrels, or an average of 1,583,329 barrels per day, (computed to an accuracy far greater than the data availble allows)....thus the 20,000 barrel per day downward revision to 2021 demand still leaves an oil shortage for last year of 570,615,085 barrels, or an average of 1,563,329 barrels per day....we were never close to running out, however, because the quantities of oil being produced globally during the pandemic of 2020 still averaged over 1.1 trillion barrels, or over 3 million barrels per day more than anyone wanted...
This Week's Rig Count
The number of drilling rigs active in the US decreased for the 9th time over the past 20 weeks during the week ending December 16th, but even with 92 weekly increases over the past 116 weeks, active rigs are still 2.1% below the prepandemic rig count....Baker Hughes reported that the total count of rotary rigs drilling in the US decreased by 4 rigs to 776 rigs over the past week, which was still 197 more rigs than the 579 rigs that were in use as of the December 17th report of 2021, but was 1,153 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 decreased by 5 to 620 oil rigs during the past week, after the number of rigs targeting oil had decreased by 2 during the prior week, but there are still 145 more oil rigs active now than were running a year ago, even as they amount to just 38.5% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and as they are still down 9.2% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 1 to 154 natural gas rigs, which was also up by 50 natural gas rigs from the 104 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.6% of the modern high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008….
Other than those rigs targeting oil and natural gas, Baker Hughes also reports that two "miscellaneous" rigs continued drilling this week: one of those was a directional rig drilling to between 5,000 and 10,000 feet on the big island of Hawaii, while the other was a directional rig drilling to between 5,000 and 10,000 feet into a formation in Lake county California that Baker Hughes doesn't track....While we haven't seen any details on either of those wells, in the past we've identified various "miscellaneous" rig activity as being for exploration, for carbon dioxide storage, and for utility scale geothermal projects...a year ago, there were were no such "miscellaneous" rigs running...
The offshore rig count in the Gulf of Mexico was down by 3 to 15 rigs this week, with 14 rigs still drilling in Louisiana's offshore waters, and only one rig still drilling for oil offshore from Texas....the Gulf rig count now matches the 15 Gulf rigs running a year ago, when 13 of the Gulf rigs were drilling for oil offshore from Louisiana and two were deployed for oil offshore from Texas...since there are not any rigs drilling off our other coasts, the Gulf rig count equals the national offshore count..
In addition to rigs running offshore, there are still two water based rigs drilling through inland bodies of water this week; those include a directional rig drilling for oil at a depth greater than 15,000 feet in Terrebonne Parish, Louisiana; and a directional rig drilling for oil to between 5,000 and 10,000 feet, inland in Lafourche Parish, Louisiana ...a year ago, there was just one such rig drilling on inland waters...
The count of active horizontal drilling rigs was down by 1 to 707 horizontal rigs this week, which was still 186 more rigs than the 521 horizontal rigs that were in use in the US on December 17th of last year, but just over half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....in addition, the directional rig count was down by three to 43 directional rigs this week, while those were still up by 11 from the 32 directional rigs that were operating during the same week a year ago…on the other hand, the vertical rig count was unchanged at 26 vertical rigs this week, which was also unchanged from the 26 vertical rigs that were in use on December 17th 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 December 16th, the second column shows the change in the number of working rigs between last week’s count (December 9th) and this week’s (December 16th) count, the third column shows last week’s December 9th 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 17th of December, 2021...
checking the Rigs by State file at Baker Hughes for the changes in the Texas Permian, we find that there was a rig pulled out of Texas Oil District 8, which overlies the core Permian Delaware, while rig counts in other districts in the Texas Permian were unchanged...since the national Permian basin count was unchanged, we can thus conclude that the rig added in New Mexico was set up to drill in the far western Permian Delaware, in the southwest corner of that state...that switch also facilitated the reduction of the Permian natural gas rig count to three, all of which are in Texas, and an increase to 347 Permian oil rigs...elsewhere in Texas, there was a rig pulled out of Texas Oil District 1, which would account for the Eagle Ford oil rig decrease, while there were was a rig added in Texas Oil District 3, apparently in a basin that Baker Hughes doesn't track.... there was also a rig pulled out of Texas Oil District 6, which had been drilling for natural gas in the Haynesville shale, and there was also a rig removed from the state's offshore waters....more than offsetting that Texas Haynesville shale loss, there were four natural gas rigs added in the Haynesville in northwest Louisiana, while Louisiana saw two rigs removed from the state's offshore waters at the same time...
elsewhere, the rig removed from Colorado had been drilling in the DJ Niobrara chalk, the rig pulled out of North Dakota had been drilling in the Bakken shale of the Williston basin, the rig removed from Oklahoma apparently had been drilling in a basin not tracked by Baker Hughes, and the two rigs pulled out of Wyoming also had been drilling in a basin or basins not tracked by Baker Hughes....since our other data shows three natural gas rigs added in the Haynesville and one pulled out of the Permian, it appears one of those rigs that had been drilling in a basin not tracked by Baker Hughes had been drilling for natural gas...lastly, the oil rig added in Alaska was added to the eight that already had been drilling on the North Slope...
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Note: there’s more here…
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