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 27, 2023

lower 48 ​oil output at a 33 month high​; commercial oil supplies at 20 month high​; biggest DUC increase in 32 months

natural gas​ hit $2 for the ​​first time in 29​ month​s; ​lower 48 ​oil production at a 33 month high​;​ commercial crude oil inventories at a new 20 month high​ as oil supplies that cannot be accounted for tops two million barrels per day; DUC backlog at 4.9 months after largest increase since June 2020​

US oil prices fell for the fourth week in the last five on rising US oil inventories and on concern over the potential for a monetary policy induced recession…after falling 4.2% to $76.34 a barrel last week on stronger than expected US inflation data and on a massive build of US crude inventories, the contract price for the benchmark US light sweet crude for March delivery rose in overseas markets on our holiday on Monday, buoyed by optimism over Chinese demand, continued production curbs by major producers, and Russia’s plans to rein in supply, and opened higher in New York on the last day of trading for that contract on Tuesday, but turned mixed as traders shifted focus to the economic and interest rate outlook ahead of the Wednesday release of ​the ​minutes from the Fed's​ recent policy meeting, and settled 18 cents lower at 76.16 a barrel as persistent concerns about global economic growth outweighed supply curbs and prompted investors to take profits on the previous day’s gains before trading in that contract expired, while the contract price for the benchmark US crude for April delivery, which would be quoted as the price of oil the next day, settled 19 cents lower at $76.27 a barrel....oil prices moved lower for a third ​straight ​trading session early on Wednesday​,​ as concerns about fuel demand were stoked by expectations that minutes due from the Fed would indicate a need to hike interest rates. and then tumbled 3% to settle $2.41 lower at $73.95 a barrel​, as traders ​worried that recent economic data would mean more aggressive interest rate increases by central banks, pressuring economic growth and fuel demand....despite Wednesday evening's American Petroleum Institute report of another major crude inventory build, oil prices increased in Asian trading on Thursday on expectations that Russia would cut its oil exports more than previously announced, and then rallied further in New York trading, buoyed by the EIA's report of a surprise drawdown of U.S. gasoline supplies amid rebounding demand for the fuel, that offset their report of another weekly build in commercial crude oil inventories, and finished trading $1.44 higher at $75.39 a barrel on expectations of steep cuts to Russian production next month, even as a stronger dollar and a sharper-than-expected jump in U.S. crude inventories added to demand concerns...oil prices edged higher in volatile Asian trading on Friday, bolstered by the prospect of lower Russian exports, but pressured by rising inventories in the United States and concerns over global economic activity. and then climbed over 2% in early US trading ahead of the U.S. PCE price index data that would help shape the debate over monetary policy, but pared early gains to close 93 cents higher at $76.32 a barrel after U.S. inflation data offered more evidence of an overheated economy and ongoing inflationary pressures, paving the way for the Fed to continue raising interest rates into restrictive territory....oil prices thus finished just 2 cents lower on the week, ending virtually flat as prices were supported by the prospect of lower Russian exports but pressured by rising inventories in the US and concerns over global economic activity, while the benchmark April contract price, which had closed the prior week at ​$​76.55 a barrel, finished 0.3% lower...

meanwhile, natural gas prices finished higher for ​just ​the 2nd time in 11 weeks, as major winter storms impacted California and​ the​ northern tier and March forecasts turned colder​...after falling 9.5% to a 28 month low of $2.275 per mmBTU last week as ​gas ​output increased while forecasts turned warmer, the contract price of US natural gas for March delivery opened 11 cents lower on Tuesday as compellingly bearish weather conditions and forecasts pushed prices lower once again, and slid 20.2 cents or almost 9% to a near 29-month low of $2.073 per mmBTU as springlike weather blanketed much of the Lower 48...after testing the $2 level in after hours trading, natural gas prices got half of Tuesday's drop back on Wednesday, rising 10.1 cents to $2.174 mmBTU, as traders turned their attention to a winter storm traversing the country, and the potential for a restart of LNG exports from the long shuttered Freeport terminal...natural gas prices advanced for a second session on Thursday, as traders looked beyond another light winter storage withdrawal to the prospect of incrementally tighter balances heading into spring, and settled 14.0 cents higher at $2.314 per mmBTU...natural gas prices finished the week on a firm note on Friday, rising 13.7 cents to $2.451 per mmBTU, as a chillier March outlook and the continued ramp of ​the Freeport export facility supported the market, and thus ended 7.7% higher on the week, as trading in the March contract ended​, while the April contract for US natural gas, which would be quoted contact next week, finished 8.3% higher at $2.548 per mmBTU​...

The EIA's natural gas storage report for the week ending February 17th indicated that the amount of working natural gas held in underground storage in the US fell by 71 billion cubic feet to 2,195 billion cubic feet by the end of the week, which left our natural gas supplies 395 billion cubic feet, or 21.9% above the 1,800 billion cubic feet that were in storage on February 17th of last year, and 289 billion cubic feet, or 15.2% more than the five-year average of 1,906 billion cubic feet of natural gas that were in storage as of the 17th of February over the most recent five years….the 71 billion cubic foot withdrawal from US natural gas working storage for the cited week was a bit more than was expected by a Reuters survey of analysts, whose average forecast called for a 68 billion cubic feet withdrawal, but it was much less than the 138 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2022, and not even half of the average 177 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 February 17th indicated that even after a big jump in our oil exports, we still had quite a bit of surplus oil left to add to our stored commercial crude supplies for the 9th consecutive week, and for the 28th time in the past 44 weeks, largely due to an ongoing glut of oil supplies that could not be accounted for... Our imports of crude oil rose by an average of 94,000 barrels per day to average 6,326,000 barrels per day, after falling by an average of 826,000 barrels per day during the prior week, while our exports of crude oil rose by 1,451,000 barrels per day to average 4,597,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 1,729,000 barrels of oil per day during the week ending February 17th, 1,357,000 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 reportedly unchanged at 12,300,000 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 14,029,000 barrels per day during the February 17th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,010,000 barrels of crude per day during the week ending February 17th, an average of 17,000 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 an average of 1,093,000 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 provided by the EIA for the week ending February 17th appear to indicate that our total working supply of oil from net imports and from oilfield production was 2,073,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [+2,073,000] 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 was an omission or error 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 precise, and since these weekly figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,725,000 barrels per day last week, which was still 3.1% more than the 6,523,000 barrel per day average that we were importing over the same four-week period last year. This week's 1,093,000 barrel per day increase in our overall crude oil inventories was all added to our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve remained unchanged.. This week’s crude oil production was reported to be unchanged at 12,300,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at a 33 month high of 11,900,000 barrels per day, while Alaska’s oil production was 8,000 barrels per day lower at 447,000 barrels per day and added 400,000 barrels per day to the the rounded national total, 100,000 barrels per day less t​han ​Alaska added​ last week....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 6.1% below that of our pre-pandemic production peak, but was 26.8% 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 85.9% of their capacity while using those 15,010,000 barrels of crude per day during the week ending February 17th, down from their 86.5% utilization rate during the prior week, but still close to normal utilization for mid February, when seasonal maintenance is ongoing. The 15,010.000 barrels per day of oil that were refined this week were 1.5% less than the 15,246,000 barrels of crude that were being processed daily during week ending February 18th of 2022, and 7.2% less than the 16,008,000 barrels that were being refined during the prepandemic week ending February 21st, 2020, when our refinery utilization was 87.9%, close to normal for mid-February ...

Even with the decrease in the amount of oil being refined this week, the gasoline output from our refineries was quite a bit higher, increasing by 339,000 barrels per day to 9,428,000 barrels per day during the week ending February 17th, after our gasoline output had increased by 4,000 barrels per day during the prior week. This week’s gasoline production was also 1.7% more than the 9,270,000 barrels of gasoline that were being produced daily over the same week of last year, while 3.8% less than the gasoline production of 9,797,000 barrels per day during the prepandemic week ending February 21st, 2020.   Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) increased by 191,000 barrels per day to 4,700,000 barrels per day, after our distillates output had decreased by 155,000 barrels per day during the prior week. With that increase, our distillates output was a bit more than the 4,693,000 barrels of distillates that were being produced daily during the week ending February 18th of 2022, while ​still ​3.0% less than the 4,846,000 barrels of distillates that were being produced daily during the week ending February 21st 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 fifteen weeks and for the 13th time in 28 weeks, decreasing by 1,856,000 barrels to 240,066,000 barrels during the week ending February 17th, after our gasoline inventories had increased by 2,316,000 barrels during the prior week. Our gasoline supplies fell this week because the amount of gasoline supplied to US users jumped by 636,000 barrels per day to 8,910,000 barrels per day, and because our imports of gasoline fell by 113,000 barrels per day to 476,000 barrels per day, while our exports of gasoline fell by 18,000 barrels per day to 768,000 barrels per day.. Even with 12 recent gasoline inventory increases, our gasoline supplies were still 2.6% below last February 18th's gasoline inventories of 246,479,000 barrels, and still about 5% below the five year average of our gasoline supplies for this time of the year…

With the big increase in our distillates production, our supplies of distillate fuels increased for the 3rd time in 8 weeks, and for the 27th time over the past year, rising by 2,698,000 barrels to 121,935,000 barrels during the week ending February 17th, after our distillates supplies had decreased by 1,285,000​​ barrels during the prior week. Our distillates supplies rose this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 123,000 barrels per day to 3,771,000 barrels per day, and because our imports of distillates rose by 193,000 barrels per day to 414,000 barrels per day, and because​v​our exports of distillates fell by 62,000 barrels per day to 958,000 barrels per day... After a run of fifty-seven inventory withdrawals over the past ninety-four weeks, our distillate supplies at the end of the week were were 1.9% below the 119,678,000 barrels of distillates that we had in storage on February 18th of 2022, ​and about 12% below the five year average of our distillates inventories for this time of the year...

Finally, with over two million barrels per day of oil new supplies that could not be accounted for, our commercial supplies of crude oil in storage rose for the 16th time in 28 weeks and for the 24th time in the past year, increasing by 7,647,000 barrels over the week, from 471,394,000 barrels on February 10th to 479,041,000 barrels on February 17th, after our commercial crude supplies had increased by 16,283,000 barrels over the prior week. With even larger oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories were at a new 20 month high, up by 13.9% from December 30th, and now about 9% above the most recent five-year average of commercial oil supplies for this time of year, and also almost 47% above the average of our available crude oil stocks as of the third weekend of February over the 5 years at the beginning of the past decade, with the apparent disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. And even 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 February 17th were 15.1% more than the 416,022,000 barrels of oil we had in commercial storage on February 18th of 2022, and 3.5% more than the 463,042,000 barrels of oil that we had in storage during the 2nd Covid surge on February 19th of 2021, and 8.1% more than the 443,335,000 barrels of oil we had in commercial storage on February 21st of 2020…

​Lastly, with the SPR at a 39 year low and our supplies of all products made from oil trending near multi-year lows over the recent months, we had been watching the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR for a sense of the big picture on petroleum related supplies.. After the commercial crude and distillate 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 3,302,000 barrels this week, from 1,629,756,000 barrels on February 10th to 1,633,058,000 barrels on February 17th​, after our total inventories had increased 19,209,000 barrels the prior week. Even after seven straight big increases, our total petroleum liquids inventories were still down by 484,585,000 barrels, or by 22.8% from their early pandemic high, but ​they ​are now up by 3.5% from their December 30th 18 1/2 year low...So, unless such aggregate supplies should begin to drop again in following weeks, this will be our last check of this metric..

This Week's Rig Count

The number of drilling rigs active in the US decreased for the 15th time over the prior 30 weeks during the week ending February 24th, and was 5.0% below the prepandemic level, even after increasing ninety-five times over the past 126 weeks... Baker Hughes reported that the total count of rotary rigs drilling in the US fell by seven to 753 rigs over the past week, which was still 103 more rigs than the 650 rigs that were in use as of the February 25th report of 2022, but was 1,176 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 7 to 600 oil rigs during the past week, after the number of rigs targeting oil had decreased by 2 during the prior week, while there are still 78 more oil rigs active now than were running a year ago, even as they amount to just 37.3% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 12.2% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations remained unchanged at 151 natural gas rigs, which was still up by 24 natural gas rigs from the 127 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.4% 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 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 was just one such "miscellaneous" rigs running...

The offshore rig count in the Gulf of Mexico was unchanged at 17 rigs this week, with 16 of those drilling for oil in Louisiana's offshore waters and one also drilling for oil in Texas waters….that Gulf rig count is still up by 5 from the 12 Gulf rigs running a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas….since there aren't any rigs drilling off our other coasts at this time, the Gulf rig count is equal to 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 were also two rigs drilling on inland waters...

The count of active horizontal drilling rigs was down by 7 to 693 horizontal rigs this week, which was still 100 more rigs than the 593 horizontal rigs that were in use in the US on February 25th of last year, but was just over half of the record 1,374 horizontal rigs that were drilling on November 21st of 2014.....at the same time, the vertical rig count was down by two to 16 vertical rigs this week, which was also down by 10 from the 26 vertical rigs that were operating during the same week a year ago…on the other hand-, the directional rig count was up by two to 44 directional rigs this week, and those were also up by 13 from the 31 directional rigs that were in use on February 25th of 2022…

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 24th, the second column shows the change in the number of working rigs between last week’s count (February 17th) and this week’s (February 24th) count, the third column shows last week’s February 17th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running on the Friday before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 25th of February, 2022...

even though the natural gas rig count was unchanged, there were quite a few changes among them to get us there...for starters, there were three natural gas rigs pulled out of West Virginia's Marcellus shale, while there were three natural gas rigs added to the Marcellus in Pennsylvania at the same time, leaving the Marcellus rig count unchanged...at the same time, there were two natural gas rigs pulled out of the Haynesville shale in Texas, while there were two natural gas rigs added to the Permian basin in Texas at the same time... checking the Rigs by State file at Baker Hughes, we find that there were two rigs added in Texas Oil District 7C, which overlies the southernmost counties in the Permian Midland, and that rig counts in the other Texas Permian districts were unchanged, so it's likely that's where they went, although switching an oil rig for a natural gas rig in another basin would also leave the apparent totals unchanged...meanwhile, since the Texas Permian basin count is up by 2 rigs while the national Permian rig count was up by one, we can conclude that one of the rigs pulled out of New Mexico had been drilling in the far west reaches of the Permian Delaware, in the southeast corner of that state, with the other rig most likely pulled from the San Juan basin in the northwest corner.....

elsewhere in Texas, the rig count was down by one in Texas Oil District 6, which we believe represents the addition of an oil rig and the removal of two Haynesville natural gas rigs in that district, based on recent oil rig activity in that area, which we have not seen in adjacent Louisiana, which was unchanged this week, with all natural gas rigs in the northern part of the state... the rig count was also down by one in Texas Oil District 10, which overlies the Granite Wash basin of the Texas panhandle, accounting for one of the rigs pulled from that basin, with the other Granite Wash apparently pulled from Oklahoma at the same time....meanwhile, Oklahoma saw oil rigs added in the Ardmore Woodford and the Cana Woodford, and an oil rig pulled out of the Arkoma Woodford....however, since the Oklahoma state count is down by two, two rigs must have been removed from an Oklahoma formation or formations not tracked by Baker Hughes at the same time...that is also the case with the two rigs pulled out of California; Baker Hughes does not separately cover any basins in that state...meanwhile, the rig pulled out of Colorado had been drilling in the DJ Niobrara chalk of the Rockies front range in that state, where all rigs target oil...

DUC well report for January

Monday of last week saw the release of the EIA's Drilling Productivity Report for February, which included the EIA's January data on drilled but uncompleted (DUC) oil and gas wells in the 7 most productive shale regions (click tab 3)....that data showed an increase in uncompleted wells nationally for the third time in 31 months and by the most since June 2020, even as both well completions and drilling of new wells decreased in January, despite being well below the average pre-pandemic levels...for the 7 sedimentary regions covered by this report, the total count of DUC wells increased by 42 wells, rising from a revised 4,629 DUC wells in December to 4,671 DUC wells in January, which was still 8.1% fewer DUCs than the 5,084 wells that had been drilled but remained uncompleted as of the end of January of a year ago...this month's DUC increase occurred as 1,005 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during January, down by 5 from the 1,010 wells that were drilled in December, while 963 wells were completed and brought into production by fracking them, down by 12 from the 975 well completions seen in December, but up by 219 from the 744 completions seen in January of last year....at the January completion rate, the 4,671 drilled but uncompleted wells remaining at the end of the month represents a 4.9 month backlog of wells that have been drilled but are not yet fracked, up from the 4.7 month DUC well backlog of a month ago, and now clearly rising from the 7 1/2 year low of 4.4 months of four months ago, despite a completion rate that is now about 15% below 2019's pre-pandemic average...

Both oil basin DUCS and natural gas basin DUCs rose during January, and only one basin saw DUCs decrease....the number of uncompleted wells in the Niobrara chalk of the Rockies' front range increased by 22, rising from 539 at the end of December to 561 DUC wells at the end of January, as 128 wells were drilled into the Niobrara chalk during January, while 106 Niobrara wells were completed....at the same time, the number of uncompleted wells remaining in Oklahoma's Anadarko basin increased by 4, rising from 722 at the end of December to 726 DUC wells at the end of January, as 75 wells were drilled into the Anadarko basin during January, while 71 Anadarko wells were completed.... likewise, DUC wells in the Permian basin of west Texas and New Mexico also increased by 4, from 1,079 DUC wells at the end of December to 1,083 DUCs at the end of January, as 437 new wells were drilled into the Permian basin during January, while 433 already drilled wells in the region were being fracked...in addition, DUC wells in the Bakken of North Dakota were up by 1 to 553 by the end of January, as 80 wells were drilled into the Bakken during January, while 79 of the drilled wells in the Bakken were being fracked.....on the other hand, DUCs in the Eagle Ford shale of south Texas decreased by 4, from 482 DUC wells at the end of December to 478 DUCs at the end of January, as 112 wells were drilled in the Eagle Ford during January, while 116 already drilled Eagle Ford wells were fracked........

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, increased by 2 wells, from 631 DUCs at the end of December to 633 DUCs at the end of January, as 99 new wells were drilled into the Marcellus and Utica shales during the month, while 97 of the already drilled wells in the region were fracked....at the same time, the uncompleted well inventory in the natural gas producing Haynesville shale of the northern Louisiana-Texas border region rose by 13, from 624 DUCs in December to 637 DUCs by the end of January, as 74 wells were drilled into the Haynesville during January, while 61 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) increased by twently-seven to 3,401 wells, while the uncompleted well count in the major natural gas basins (the Marcellus, the Utica, and the Haynesville) was up by fifteen to 1,270 DUC 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..

Monday, February 20, 2023

natural gas price ​at a 28 month low; commercial oil supplies at a ​20 month high; January global oil surplus at 440,000 bpd

natural gas prices settle ​at a 28 month low; commercial crude oil inventories are at a ​20 month high after ​8 straight increases​ and a record 12.1% jump YTD; global oil production exceeded demand by ​440,000 barrels per day in ​January, despite OPEC production that was ​931,000 barrels per day below their reduced quota

US oil prices fell for the third ​week in four on​ stronger than expected US​ inflation​ data and​ on​ a massive build of US crude inventories... after rising 8.6% to $79.72 a barrel last week after an earthquake shut a key Turkish pipeline, the Saudis hiked their prices on crude to Asia, and Russia unilaterally cut their oil output, the contract price for the benchmark US light sweet crude for March delivery fell in early Asian trading on Monday on fears that higher US inflation would lead to tighter monetary policy and hence a US recession, but then moved higher in US trading as traders weighed the impact of Russia’s plans to cut production in March, and settled 42 cents higher at $80.14 a barrel as the U.S. dollar retreated ahead of the release of Tuesday's inflation report, and its potential impact on monetary policy​.​..however. oil prices opened lower and fell as much as 3.3% early Tuesday following a late Monday announcement that the US DoE would release more crude from its Strategic Petroleum Reserve​,​ at a time when U.S. markets were already flush with supply, and settled $1.08 lower at $79.06 a barrel following a strong US inflation report that triggered repricing of how aggressive Fed rate hikes would need to be to bring inflation down...oil prices slipped further in early Asian trade on Wednesday, after American Petroleum Institute figures released late Tuesday pointed to a jump in U.S. crude supplies, and then extended those losses in late morning trading after the EIA reported a massive build of US inventories, and as US refiners unexpectedly slowed their run rates, but seesawed in afternoon trading after stronger-than-expected retail sales revealed more evidence of a reaccelerating U.S. economy, strengthening the case for higher interest rates, and settled just 47 cents lower at $78.59 a barrel, as an International Energy Agency forecast for record demand later this year limited losses...oil prices recovered marginally in early Asian trading on Thursday, despite the large build in US inventories, following higher ​oil ​demand forecasts for 2023 from OPEC and the International Energy Agency, and rallied further on expectations of a surge in oil demand in China, the world's largest oil importer. but fell back in US trading after the U.S. producer price index offered more evidence of inflation,,raising the odds that the Fed would raise interest rates more aggressively in the coming months and settled 10 cents lower at $78.59 a barrel as traders weighed mixed U.S. economic signals and prospects for a Chinese demand recovery with a big build in U.S. crude stockpiles...;prices slid further in Asian trading on Friday as strong US economic data heightened concern that the Fed would continue tight monetary policy to tackle inflation, which would hit fuel demand even as supply grew, and then plummeted more than 3% in early New York trading as traders repriced the risk that The Fed would bring back larger interest rate increases in the coming months to combat stubbornly high inflation and a tight labor market. and settled $2.15 lower at $76.34 a barrel as oil traders worried that future U.S. interest rate hikes would weigh on demand and about mounting signs of ample crude and fuel supply. thus finishing with a 4.2% loss on the week....

meanwhile, US natural gas prices fell for the ninth week out of the past ten as output increased while forecasts turned warmer....after rising 4.3% to $2.514 per mmBTU last week on weather induced short covering and expectations of higher LNG exports, the contract price of US natural gas for March delivery moved lower in early trading Monday as traders weighed signs of a return to action for the long-idled Freeport LNG export terminal against loose supply balances driven by mild winter weather and settled down 10.9 cents to a near 25 month low of $2.405 per mmBTU on rising output and forecasts for warmer weather than had been expected....Natural gas prices strengthened on Tuesday on signs of life at the long-dormant Freeport LNG export terminal, and on the potential for another cold snap to arrive in the Lower 48 later this month with the March NYMEX gas futures contract settling 16.2 cents higher on the day at $2.567 per mmBTU as the amount of gas going to liquefied natural gas (LNG) export plants jumped to a 10-month high with a rapid increase in gas flows to Freeport LNG's export plant in Texas....however, natural gas futures fell about 4% to $2.471 per mmBTU on Wednesday on forecasts for lower demand than ​had been ​previously expected over the next two weeks, even as spot prices ​moved higher on coal-to-gas switching in the power generation sector...natural gas prices retreated again on Thursday, after the EIA reported that inventories of the heating fuel were 17% higher than a year ago​,​ and settled 8.2 cents lower at a 25 month low of $2.389 per mmBTU, as traders were reminded of the demand weakness that permeated the U.S. market through early 2023...natural gas prices moved lower again on Friday with more warm-ups projected in the 1-15 day temperature outlook further tempering demand, and well production remaining robust and settled down 11.4 cents at a 28 month low of $2.275 per mmBTU, after shedding 9.5% over the week..

The EIA's natural gas storage report for the week ending February 10th indicated that the amount of working natural gas held in underground storage in the US fell by 100 billion cubic feet to 2,266 billion cubic feet by the end of the week, which left our natural gas supplies 328 billion cubic feet, or 16.9% above the 1,938 billion cubic feet that were in storage on February 10th of last year, and 183 billion cubic feet, or 8.8% more than the five-year average of 2,083 billion cubic feet of natural gas that were in storage as of the 10th of February over the most recent five years….the 100 billion cubic foot withdrawal from US natural gas working storage for the cited week was less than was expected by a Reuters survey of analysts, whose average forecast called for a 109 billion cubic feet withdrawal, and it was much less than the 195 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2022, and also much less than the average 166 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 February 10th indicated that even after a substantial decrease in our oil imports, we had quite a bit of surplus oil left to add to our stored commercial crude supplies for the 8th consecutive week, and for the 27th time in the past 43 weeks, partly due to a significant drop in refinery throughput, but mostly due to a large increase in oil supplies that could not be accounted for... Our imports of crude oil fell by an average of 826,000 barrels per day to average 6,232,000 barrels per day, after falling by an average of 225,000 barrels per day during the prior week, while our exports of crude oil rose by 246,000 barrels per day to average 3,146,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 3,086,000 barrels of oil per day during the week ending February 10th, 1.072,000 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 reportedly unchanged at 12,300,000 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 15,386,000 barrels per day during the February 10th reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,027,000 barrels of crude per day during the week ending February 10th, an average of 383,000 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 an average of 2,326,000 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 provided by the EIA for the week ending February 10th appear to indicate that our total working supply of oil from net imports and from oilfield production was 1,967,000 barrels per day less than what was added to storage plus our oil refineries reported they used during the week. To account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just inserted a [+1,967,000] 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 was an omission or error of that magnitude in this week’s oil supply & demand figures that we have just transcribed.... Furthermore, since last week’s “unaccounted for crude oil” was at [-702,000] barrels per day, that means there was a 2,669,000 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, thus rendering any such comparisons meaningless nonsense.... However, since most everyone treats these weekly EIA reports as precise, and since these weekly figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 6,619,000 barrels per day last week, which was ​still ​3.8% more than the 6,375,000 barrel per day average that we were importing over the same four-week period last year. This week's 1,967,000 barrel per day increase in our overall crude oil inventories was all added to our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve remained unchanged.. This week’s crude oil production was reported to be unchanged from last week's thirty-three week high of 12,300,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was unchanged at 11,800,000 barrels per day, while Alaska’s oil production was 4,000 barrels per day higher at 456,000 barrels per day and added 500,000 barrels per day to the the rounded national 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 still 6.1% below that of our pre-pandemic production peak, but was 26.8% 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 86.5% of their capacity while using those 15,027,000 barrels of crude per day during the week ending February 10th, down from their 87.9% utilization rate during the prior week, but still close to normal utilization for early February, when seasonal maintenance starts to impact throughput. The 15,027.000 barrels per day of oil that were refined this week were 8.4% more than the 14,902,000 barrels of crude that were being processed daily during week ending February 11th of 2022, while 7.3% less than the 16,210,000 barrels that were being refined during the prepandemic week ending February 14th, 2020, when our refinery utilization was 89.4%, ​also close to normal for early February ...

With the decrease in the amount of oil being refined this week, the gasoline output from our refineries was a bit lower, decreasing by 4,000 barrels per day to 9,089,000 barrels per day during the week ending February 10th, after our gasoline output had decreased by 350,000 barrels per day during the prior week. This week’s gasoline production was still 2.9% more than the 8,830,000 barrels of gasoline that were being produced daily over the same week of last year, while 4.6% less than the gasoline production of 9,525,000 barrels per day during the prepandemic week ending February 14th, 2020. Meanwhile, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 155,000 barrels per day to 4,692,000 barrels per day, after our distillates output had decreased by 28,000 barrels per day during the prior week.  Even with that, our distillates output was 1.2% more than the 4,455,000 barrels of distillates that were being produced daily during the week ending February 11th of 2022, while 7.9 less than the 4,852,000 barrels of distillates that were being produced daily during the week ending February 14th 2020...

Even with the recent decreases in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the twelfth time in fourteen weeks and for the 15th time in 27 weeks, increasing by 2,316,000 barrels to 241,922,000 barrels during the week ending February 10th, after our gasoline inventories had increased by 5,008,000 barrels during the prior week. Our gasoline supplies rose by less this week even though the amount of gasoline supplied to US users fell by 154,000 barrels per day to 8,274,000 barrels per day, and even though our imports of gasoline fell by 400,000 barrels per day to 589,000 barrels per day, while our exports of gasoline fell by 157,000 barrels per day to 786,000 barrels per day.. But even after 12 recent gasoline inventory increases, our gasoline supplies were still 2.1% below last February 11th's gasoline inventories of 247,061,000 barrels, and still about 5% below the five year average of our gasoline supplies for this time of the year…

With the big decrease in our distillates production, our supplies of distillate fuels increased for the 5th time in 7 weeks, and for the 26th time over the past year, falling by 1,285,000 barrels to 119,237,000 barrels during the week ending February 10th, after our distillates supplies had increased by 2,932,000 barrels during the prior week. Our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 132,000 barrels per day to 3,894,000 barrels per day, and because our imports of distillates fell by 471,000 barrels per day to 221,000 barrels per day, while our exports of distillates fell by 156,000 barrels per day to 1,020,000 barrels per day... After a run of fifty-seven inventory withdrawals over the past ninety-three weeks, our distillate supplies at the end of the week were were 0.8% below the 120,262,000 barrels of distillates that we had in storage on February 11th of 2022, ​and about 15% below the five year average of our distillates inventories for this time of the year...

Meanwhile, boosted by​ the big jump in oil supplies that could not be accounted for, our commercial supplies of crude oil in storage rose for the 15th time in 27 weeks and for the 24th time in the past year, increasing by 16,283,000 barrels over the week, from 455,111,000 barrels on February 3rd to 471,394,000 barrels on February 10th, after our commercial crude supplies had increased by 2,423,000 barrels over the prior week. With even larger oil supply increases in the weeks following the Christmas refinery freeze offs, our commercial crude oil inventories were at a new 20 month high, up 12.1% from December 30th, and now about 8% above the most recent five-year average of commercial oil supplies for this time of year, and also about 45% above the average of our available crude oil stocks as of the second weekend of February over the 5 years at the beginning of the past decade, with the apparent disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels. And even 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 February 10th were 14.6% more than the 411,508,000 barrels of oil we had in commercial storage on February 11th of 2022, and 2.1% more than the 461,757,000 barrels of oil that we had in storage during the 2nd Covid surge on February 12th of 2021, and 2.9% more than the 442,883,000 barrels of oil we had in commercial storage on February 14th of 2020…

Finally, with the SPR at a 39 year low and our supplies of all products made from oil trending near multi-year lows over the recent months, we have been watching the total of all U.S. Stocks of Crude Oil and Petroleum Products, including those in the SPR for a sense of the big picture.. After the commercial crude and gasoline 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 19,209,000 barrels this week, from 1,610,547,000 barrels on February 3rd to 1,629,756,000 barrels on February 10th after our total inventories had increased 3,354,000 barrels the prior week. Even after six straight increases, our total petroleum liquids inventories were still down by 487 887,000 barrels, or by 23.0% from their early pandemic high, but are now up by 3.3% from their December 30th 18 1/2 year low....

OPEC's Report on Global Oil for January

Tuesday of this past week saw the release of OPEC's February Oil Market Report, which includes the details on OPEC's & global oil data for January, and hence it gives us a picture of the global oil supply & demand situation during a period when global demand for oil was increasing after China reopened to foreign travelers and removed the Covid-related lockdowns on its citizens, while oil supplies from Russia were further reduced by the  European Union's ban of Russian oil imports by sea, and by the G7's Russian oil price cap....January was also the third month that OPEC and aligned oil producers were operating under a 2 million barrel per day production cut, meant to take roughly 2% of global oil supplies off the market, in response to a perceived global surplus and related ​lower prices... 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 58), 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 in the bottom right hand corner of the above table, OPEC's oil output decreased by a rounded 49,000 barrels per day to 28,876,000 barrels per day during January, down from their revised December production total that averaged 28,926,000 barrels per day....however, that December output figure was originally reported as 28,971,000 barrels per day, which therefore means that OPEC's December production was revised 45,000 barrels per day higher with this report, and hence OPEC's January production was, in effect, a rounded 95,000 barrels per day less than the previously reported OPEC production figure (for your reference, here is a copy of the table of the official December 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 beginning in November, and while the net 653,000 barrel per day they've cut since were well short of that, OPEC's production was already running 1,585,000 barrels per day below what they were expected to produce when this policy was initiated in October, so the 28,876,000 barrels per day they produced in January still leaves them 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 33rd 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, and the quotas shown above were reaffirmed for the first 6 months of 2023 in the press release following the 34th OPEC and non-OPEC Ministerial Meeting on December 4th, 2022....the first column above, labeled "August 2022 required production", actually matches the October 2018 baseline production level on which OPEC and aligned producers have based all of their quotas since the onset of the pandemic, and the "Voluntary adjustment" is the production cut each country is expected to make from that level, leaving each with a Volunary Production level they're expected to hit during 2023, whether they've produced that much recently or not....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 since May 2020, they are not shown on the above 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 from November 2022 through December 2023...therefore, the 24,485,000 barrels those 10 OPEC members actually produced in January were 931,000 barrels per day short of what they were expected to produce during the month, with Nigeria, Angola and Saudi Arabia 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 February 2021 to January 2023, and it comes from page 49 (pdf page 59) of OPEC's January 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 49,000 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 increased by a rounded 600,000 barrels per day to average 101.70 million barrels per day in December, a reported increase which came after December's total global output figure was apparently revised down by a rounded 600,000 barrels per day from the 101.70 million barrels per day of global oil output that was reported for December a month ago, as non-OPEC oil production rose by a rounded 700,000 barrels per day in January after that downward revision, with most of January's production growth coming from OECD Americas, OECD Europe, and Latin America, which were partially offset by a further oil production decline in Russia…

After that 700,000 barrel per day January increase in global output, the 101.70 million barrels of oil per day that were produced globally during the month were 3.16 million barrels per day, or 3.2% more than the revised 98.54 million barrels per day that were being produced globally in January a year ago, which was the sixth month of the series of 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 February 2022 OPEC report for the originally reported January 2022 details)…since this month's decrease in OPEC's output contrasts to the reported global increase, their January oil production of 28,876,000 barrels per day was down by 0.2% to at 28.4% of what was produced globally during the month, after their share of the global total in December was revised up from the 28.5% reported last month (due to the large downward revision to global output)….OPEC's January 2022 production was ultimately revised to 28,033,000 barrels per day with the March 2022 OPEC report, which means that the same 13 OPEC members who were part of OPEC last year produced 843,000 barrels per day, or 3.0% more barrels per day of oil this January than what they produced last January, when they also accounted for 28.4% of a smaller global output total…

With the modest increase in global oil output that we've seen in this report, the amount of oil being produced globally during the month was​ again​ a bit above the expected global demand, as this next table from the OPEC report will show us..

The above table came from page 28 of the February Oil Market Report (pdf page 38), and it shows regional and total oil demand estimates in millions of barrels per day for 2022 in the first column, and then OPEC's estimate of oil demand by region and globally​,​ quarterly over 2023 over the rest of the table…on the "Total world" line in the second column, we've highlighted in blue the figure that's relevant for January, which is their estimate of global oil demand during the first quarter of 2023….OPEC is estimating that during the 1st quarter of this year, all oil consuming regions of the globe will use an average of 101.26 million barrels of oil per day, which is an upward revision of 220,000 barrels per day from their estimate 101.04 million barrels per day for 1st quarter demand of 2023 a month ago (that revision is highlighted 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 101.70 million barrels per day during January, which would imply that there was surplus of around 440,000 barrels per day of global oil production in January, when compared to the demand estimated for the month...

Note that in addition to figuring the January oil surplus that's indicated by this report, the downward revision of 600,000 barrels per day to December's global oil output that's implied in this report means that the 520,000 barrels per day global oil output surplus we had previously figured for December would now have to be revised to an oil production shortage of 80,000 barrels per day...

This Week's Rig Count

The number of drilling rigs active in the US decreased for the 14th time over the prior 29 weeks during the week ending February 17th, and was 4.2% below the prepandemic level, even after increasing ninety-five times over the past 125 weeks...Baker Hughes reported that the total count of rotary rigs drilling in the US fell by one rig to 760 rigs over the past week, which was still 115 more rigs than the 645 rigs that were in use as of the February 18th report of 2022, but was 1,169 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 2 to 607 oil rigs during the past week, after the number of rigs targeting oil had increased by 10 during the prior week, ​and there are still 87 more oil rigs active now than were running a year ago, even as they amount to just 37.7% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are now down 11.1% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations increased by 1 to 151 natural gas rigs, which was​ also up by 27 natural gas rigs from the 124 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.4% 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 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 was just one such "miscellaneous" rigs running...

The offshore rig count in the Gulf of Mexico decreased by one to ​17 rigs this week, with 16 of those drilling for oil in Louisiana's offshore waters and one also drilling for oil in Texas waters….that Gulf rig count is still up by 5 from the 12 Gulf rigs running a year ago, when 11 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas….since there aren't any rigs drilling off our other coasts at this time, the Gulf rig count is equal to 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 were also two rigs drilling on inland waters...

The count of active horizontal drilling rigs was unchanged at 700 horizontal rigs this week, which was still 126 more rigs than the 574 horizontal rigs that were in use in the US on February 18th of last year, but just 50.9% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....however, the directional rig count was down by 1 to 42 directional rigs this week, but those were still up by 11 from the 31 directional rigs that were operating during the same week a year ago…meanwhile, the vertical rig count was unchanged at 18 vertical rigs this week, which was down by 7 from the 25 vertical rigs that were in use on February 18th of 2022…

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 17th, the second column shows the change in the number of working rigs between last week’s count (February 10th) and this week’s (February 17th) count, the third column shows last week’s February 10th 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 18th of February, 2022...

the Louisiana rig count was down by two with the removal of one of the rigs that had been drilling in the state's offshore waters, and a natural gas rig that had been drilling in the Haynesville shale the northwest corner of that state; the Haynesville ​rig ​count remained unchanged, however, as a natural gas rig was added across the border in the Texas part of that formation...meanwhile, Oklahoma saw two oil rigs added in the Cana Woodford, but since the state count is only up by one, a rig must have been removed from an Oklahoma formation not tracked by Baker Hughes at the same time...

to make a determination on what happened in Colorado and Wyoming, we'll check the North America Rotary Rig Count Pivot Table at Baker Hughes, where they include individual well records going back to 2011; there we find that one of the 13 DJ-Niobrara rigs that had been drilling in Weld County, Colorado last week was removed, which means that the rig added in Wyoming was added in that formation, apparently in Laramie county​, to leave the Niobrara count unchanged​....then, to determine where the rig removed from New Mexico had been drilling, we check the Rigs by State file at Baker Hughes to see what the changes were in the Texas Permian basin​; there we find that there were two rigs added in Texas Oil District 8, which overlies the core Permian Delaware, but there was a rig pulled out of Texas Oil District 7C, which overlies the southernmost counties in the Permian Midland...since the Texas Permian was thus up by one rig while the national Permian rig count was unchanged, we can conclude that the rig pulled out of New Mexico had been drilling in the far west reaches of the Permian Delaware, in the southwest corner of that state...​meanwhile, one of the District 8 Permian rig additions was ​targeting  natural gas, accounting for this week's natural gas rig increase…

elsewhere in Texas, there were two rigs added in Texas Oil District 1, but there were three rigs pulled out of Texas Oil District 2, both ​in ​districts that overlie the Eagle Ford shale...so while it's likely two of those involve offsetting changes in the Eagle Ford, at least one removal was targeting a formation not tracked by Baker Hughes...there was also a natural gas rig added in the Haynesville shale of Texas Oil District 6, while there was also a rig pulled out of Texas Oil District 10, which overlies the Granite Wash basin of the Texas panhandle, but apparently was not pulled from that basin, unless another Granite Wash rig were added in Oklahoma at the same time...if anyone really needs to know, you can dig through the well records of Texas and Oklahoma in the Pivot Table to find out for sure…

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Note:  there’s more here..

Sunday, February 12, 2023

oil production at a 33 week high; commercial crude inventories at a 19 month high; distillates imports at a 17 year high..

natural gas prices hit a new 25 month low; oil production was at a 33 week high; commercial crude oil inventories are at a 19 month high after 7 straight increases; imports of distillates were at a 17 year high..

Oil prices rose for the first week in three after a key Turkish pipeline was shut following an earthquake, the Saudis hiked their prices on crude to Asia, and Russia unilaterally cut their oil output ...after falling 7.9% to $73.39 a barrel last week as fears of higher interest rates were exacerbated by a much stronger than expected jobs report, the contract price for the benchmark US light sweet crude for March delivery edged up in early Asian trading on Monday after International Energy Agency Executive Director Fatih Birol on Sunday had highlighted that China’s demand recovery was a key driver for oil prices, then continued to rally in New York trading as a major pipeline carrying around 1.2 million barrels per day to European refiners was shut down by an earthquake in Turkey, and settled 72 cents higher at $74.11 a barrel, buoyed by signs of stronger demand from China and concerns over supplies from the Middle East...oil prices gapped higher on the opening on Tuesday, driven by optimism over recovering demand in China and concerns over supply shortages following the shutdown of the Ceyhan terminal in Turkey, then spiked again after Fed Chairman Powell commented that he still expects inflation to come down significantly this year without a recession. and settled $3.03 or 4% higher at $77.14 a barrel after Saudi Arabia signaled confidence in the demand outlook with a surprise boost​ of their crude price to Asia...oil prices extended those gains overnight after the American Petroleum Institute reported domestic crude oil inventories had declined for the first time in seven weeks, and opened higher on Wednesday, then slid back in morning trading after the EIA reported across-the-board inventory increases and a crude production hike, but again spiked after Turkish officials acknowledged quake damage to the pipeline carrying oil from Iraq to Mediterranean ports, as the key export facility in Ceyhan remained shut down a third straight day. and settled $1.33 higher at $78.47 a barrel as the Fed was seen as less hawkish than feared, boosting risk appetite and weighing on the dollar…oil prices moved higher early Thursday, buoyed by hopes of increased Chinese demand, even as the higher inventories reported by the EIA on Wednesday limited the market’s gains, but then pulled back on profit taking following the big gains ​of ​early in the week to settle 41 cents lower at $78.06 a barrel, as traders reassessed the earthquake​'s​ impact on supply and fears that the Fed would continue to aggressively hike rates to cool inflation were rekindled...oil prices fell in early trade on Friday after a report on Thursday had showed the number of Americans claiming unemployment benefits increased more than expected last week, reigniting recession fears, then seesawed between fears of a US recession and hopes for strong fuel demand recovery in China​​, before rallying to settle $1.66 or more than 2% higher at $79.72  a barrel after Russia announced plans to reduce their oil production next month in response to Western price caps on the country's crude and fuel, and thus ended up 8.6% for the week, the biggest weekly jump since October...

meanwhile, US natural gas prices finished higher for the first time in nine weeks on weather induced short covering and ​expectations of higher LNG exports...after falling 15.4% to a 25 month low of $2.410 per mmBTU last week as traders looked past a polar outbreak to warmer weather through mid-February, the contract price of US natural gas for March delivery opened lower on Monday and traded near 25 month lows for most of the session, but inched higher near the close to settle 4.7 cents higher at $2457 per mmBTU as bargain hunters emerged at the lower price level....the March contract price then opened 5 cents higher on Tuesday, as the latest forecasts showed a possible return for frigid temperatures by month-end and rose throughout the session to settle 12.7 cents higher at $2.584 per mmBTU as short sellers booked their profits for a second day.​.​..however, natural gas prices opened lower on Wednesday and fell 18.8 cents, or 7.3% to a new 25 month low of $2.396 per mmBTU on a slow rise in output as warmer weather thawed frozen wells, a decline in LNG exports, and forecasts for mostly mild weather through late February...after opening higher on Thursday, natural gas prices fell to a 28 month low at $2.351 after the storage report, but recovered to close 3.4 cents higher at $2.430 per mmBTU on rising LNG exports, forecasts for slightly colder weather over the next two weeks than previously expected and a bigger-than-expected weekly storage draw...natural gas prices moved higher Friday, boosted by a brief blast of cold air sweeping across the central and eastern United States, then rallied to close up 8.4 cents, or 3.5% higher at $2.514 per mmBTU after the first vessel arrived at Freeport LNG's export plant in Texas since the facility was shut in a fire in June of last year and hence managed a 4.3% gain on the week..

The EIA's natural gas storage report for the week ending February 3rd indicated that the amount of working natural gas held in underground storage in the US fell by 217 billion cubic feet to 2,366 billion cubic feet by the end of the week, which left our natural gas supplies 233 billion cubic feet, or 10.9% above the 2,133 billion cubic feet that were in storage on February 3rd of last year, and 117 billion cubic feet, or 5.2% more than the five-year average of 2,249 billion cubic feet of natural gas that were in storage as of the 3rd of February over the most recent five years….the 217 billion cubic foot withdrawal from US natural gas working storage for the cited week was more than was expected by a Reuters survey of analysts, whose average forecast called for a 195 billion cubic feet withdrawal of gas, but it was less than the 228 billion cubic feet that were pulled out of natural gas storage during the corresponding week of 2022, while more than the average 171 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 February 3rd indicated that after another substantial decrease in our oil exports, we had surplus oil left to add to our stored commercial crude supplies for the ​7th consecutive weekly increase, and for the 26th time in the past 42 weeks, despite a big increase in refinery throughput and another unusual increase in oil demand that could not be accounted for... Our imports of crude oil fell by an average of 225,000 barrels per day to average 7,058,000 barrels per day, after rising by an average of 1,378,000 barrels per day during the prior week, while our exports of crude oil fell by 592,000 barrels per day to average 2,900,000 barrels per day, which combined meant that the net of our trade in oil worked out to a net import average of 4,158,000 barrels of oil per day during the week ending February 3rd, 367,000 more barrels per day than the net of our imports minus our exports during the prior week. Over the same period, production of crude from US wells was reportedly 100,000 barrels per day higher at ​a 33 week high of ​12,300,000 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 16,458,000 barrels per day during the February 3rd reporting week…

Meanwhile, US oil refineries reported they were processing an average of 15,410,000 barrels of crude per day during the week ending February 3rd, an average of 448,000 more 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 an average of 346,000 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 provided by the EIA for the week ending February 3rd appear to indicate that our total working supply of oil from net imports and from oilfield production was 702,000 barrels per day more than what was added to storage plus 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 [-702,000] 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 an omission or error 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 precise, and since these weekly figures often drive oil pricing, and hence decisions to drill or complete oil wells, we’ll continue to report this data just as it's published, and just as it's watched & believed to be reasonably accurate by most everyone in the industry...(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….

Further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,776,000 barrels per day last week, which was 2.5% more than the 6,614,000 barrel per day average that we were importing over the same four-week period last year. This week's 346,000 barrel per day increase in our overall crude oil inventories was all added to our commercially available stocks of crude oil, while the amount of oil in our Strategic Petroleum Reserve remained unchanged.. This week’s crude oil production was reported to be 100,000 barrels per day higher at​ a thirty-three week high of​ 12,300,000 barrels per day because the EIA's rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,800,000 barrels per day, while Alaska’s oil production was 1,000 barrels per day higher at 452,000 barrels per day and ​added 5​00,000 barrels per day ​to the​ the rounded national 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 ​still ​6.1% below that of our pre-pandemic production peak, but was 26.8% 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 87.9% of their capacity while using those 15,410,000 barrels of crude per day during the week ending February 3rd, up from their 85.7% utilization rate during the prior week, and close to normal utilization for early February, when seasonal maintenance tends to ​start impacting throughput.  The 15,410.000 barrels per day of oil that were refined this week were still 1.1% less than the 15,577,000 barrels of crude that were being processed daily during week ending February 4th of 2022, and 3.8% less than the 16,020,000 barrels that were being refined during the prepandemic week ending February 7th, 2020, when our refinery utilization was at a fairly normal 88.0% for early February ...

Even with the increase in the amount of oil being refined this week, the gasoline output from our refineries was quite a bit lower, decreasing by 350,000 barrels per day to 9,093,000 barrels per day during the week ending February 3rd, after our gasoline output had increased by 612,000 barrels per day during the prior week. This week’s gasoline production was still 3.2% less than the 9,390,000 barrels of gasoline that were being produced daily over the same week of last year, while 1.6% less than the gasoline production of 9,241,000 barrels per day during the prepandemic week ending February 7th, 2020. Similarly, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 28,000 barrels per day to 4,692,000 barrels per day, after our distillates output had increased by 100,000 barrels per day during the prior week. And with that, our distillates output was 0.7% less than the 4,699,000 barrels of distillates that were being produced daily during the week ending February 4th of 2022, and 3.6% less than the 4,837,000 barrels of distillates that were being produced daily during the week ending February 7th 2020...

Even with the decrease in our gasoline production, our supplies of gasoline in storage at the end of the week rose for the eleventh time in thirteen weeks and for the 14th time in 26 weeks, increasing by 5,008,000 barrels to 239,606,000 barrels during the week ending February 3rd, after our gasoline inventories had increased by 2,576,000 barrels during the prior week. Our gasoline supplies rose by more this week because the amount of gasoline supplied to US users fell by 63,000 barrels per day to 8,428,000 barrels per day, and because our imports of gasoline rose by 488,000 barrels per day to​ a 21 week high of​ 989,000 barrels per day, while our exports of gasoline rose by 17,000 barrels per day to 943,000 barrels per day.. But even after 11 recent gasoline inventory increases, our gasoline supplies were still 3.5% below last February 4th's gasoline inventories of 248,393,000 barrels, and still about 6% 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 2nd time in 6 weeks, and for the 26th time over the past year, rising by 2,932,000 barrels to 117,590,000 barrels during the week ending February 3rd, after our distillates supplies had increased by 2,320,000 barrels during the prior week. Our distillates supplies rose again this week even ​though the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 70,000 barrels per day to 3,762,000 barrels per day, because our imports of distillates rose by 279,000 barrels per day to a 17 year high of 692,000 barrels per day, while our exports of distillates rose by 195,000 barrels per day to 1,176,000 barrels per day... After a run of fifty-six inventory withdrawals over the past ninety-two weeks, our distillate supplies at the end of the week were were 1.1% below the 121,814,000 barrels of distillates that we had in storage on February 4th of 2022, while about 15% below the five year average of ​our ​distillates inventories for this time of the year...

Meanwhile, with a big decrease in our oil exports, our commercial supplies of crude oil in storage rose for the 14th time in 26 weeks and for the 24th time in the past year, increasing by 2,423,000 barrels over the week, from 452,688,000 barrels on January 27th to 455,111,000 barrels on February 3rd, after our commercial crude supplies had increased by 4,140,000 barrels over the prior week. With big oil supply increases in recent weeks following the Christmas refinery freeze offs, our commercial crude oil inventories were at a new 19 month high, about 4% above the most recent five-year average of commercial oil supplies for this time of year, and also 40.4% above the average of our available crude oil stocks as of the 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. And even 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 February 3rd were 10.9% more than the 410,387,000 barrels of oil we had in commercial storage on February 4th of 2022, but 3.0% less than the 469,014,000 barrels of oil that we had in storage during the 2nd Covid surge on February 5th of 2021, while 2.9% more than the 442,468,000 barrels of oil we had in commercial storage on February 7th of 2020…

Finally, with the SPR at a 39 year low and our supplies of all products made from oil trending near multi-year lows over the 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 for a sense of the big picture.. After the commercial crude, gasoline, and distillate 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 3,354,000 barrels this week barrels this week, from 1,607,193,000 barrels on January 27th to 1,610,547,000 barrels on February 3rd after our total inventories had increased 1,597,000 barrels during the prior week. Even after five straight increases, our total petroleum liquids inventories were still down by 507,096,000 barrels, or by 23.9% from their early pandemic high, and are just 2.0% off their recent 18 1/2 year low...

This Week's Rig Count

The number of drilling rigs active in the US increased for the 14th time over the prior 28 weeks during the week ending February 10th, and for the 95th time in 124 weeks, but still remain 4.0% below the prepandemic level...Baker Hughes reported that the total count of rotary rigs drilling in the US rose by 2 rigs to 761 rigs over the past week, which was also 126 more rigs than the 635 rigs that were in use as of the February 11th report of 2022, but was 1,168 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 increased by 10 to 609 oil rigs during the past week, after the number of rigs targeting oil had decreased by 10 during the prior week, but there are still 93 more oil rigs active now than were running a year ago, even as they amount to just 37.8% of the shale era high of 1609 rigs that were drilling for oil on October 10th, 2014, and while they are still down 10.8% from the prepandemic oil rig count….at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 8 to 150 natural gas rigs, which was still up by 32 natural gas rigs from the 118 natural gas rigs that were drilling during the same week a year ago, even as they were only 9.3% 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 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 was just one such "miscellaneous" rigs running...

The offshore rig count in the Gulf of Mexico increased by six to eighteen rigs this week, with 17 of those drilling for oil in Louisiana's offshore waters and a new one also added for oil in Texas waters....that Gulf rig count is now up  by 4 from the 16 Gulf rigs running a year ago, when 15 Gulf rigs were drilling for oil offshore from Louisiana and one was deployed for oil offshore from Texas....since there aren't any rigs drilling off our other coasts at this time, the Gulf rig count is equal to 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 were also two rigs drilling on inland waters...

The count of active horizontal drilling rigs was unchanged at 700 horizontal rigs this week, which was still 126 more rigs than the 574 horizontal rigs that were in use in the US on February 11th of last year, but just 50.9% of the record 1,374 horizontal rigs that were drilling on November 21st of 2014....however, the directional rig count was up by 5 to 43 directional rigs this week, and those were also up by 10 from the 33 directional rigs that were operating during the same week a year ago…on the other hand, the vertical rig count was down by 3 to 18 vertical rigs this week, which was down by 19 from the 28 vertical rigs that were in use on February 11th of 2022…

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 10th, the second column shows the change in the number of working rigs between last week’s count (February 3rd) and this week’s (February 10th) count, the third column shows last week’s February 3rd 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 the11th of February, 2022...

some of this week's rig changes can be characterized as reversing the changes of recent weeks; for instance, four weeks ago there were 19 rigs drilling in the Gulf of Mexico; with one of those offshore from Texas; over three weeks that Gulf count was reduced to 12 rigs, all offshore from Louisiana; this week we've had the restoration of all but one of those rigs, with 5 rigs additions in Louisiana waters and another one offshore from Texas; that's typical of the type of change one might see with a Gulf hurricane approaching, but in this case appears to have been due to several rigs moving between jobsites during the same period...ie, in Louisiana's waters, rigs were pulled out of Green Canyon and Mississippi Canyon, while a Gulf rig was set up to target ​the ​South Timbalier​ field, and the Texas Gulf rig that had been drilling in East Breaks was moved to Alaminos Canyon...meanwhile, three weeks ago, the E&Ps started adding natural gas rigs in the Permian basin, first adding four natural gas rigs while shutting down an oil rig, then adding two more natural gas rigs last week while shutting down five oil rigs at the same time...however, this week, 7 natural gas rigs were removed from the Permian, leaving just two, while four oil rigs were added....

so, checking the Rigs by State file at Baker Hughes to see what the changes were in the Texas Permian basin, we find that there were six rigs pulled out of Texas Oil District 8, which overlies the core Permian Delaware, and there was another rig pulled out of Texas Oil District 7B, which has a few counties over the easternmost Permian Midland, but that there was a rig added in Texas Oil District 8A, which overlies the northernmost counties in the Permian Midland...since the Texas Permian is thus down by six rigs while the national Permian rig count is only down by two, we can conclude that all the rigs added in New Mexico were set up in the far west reaches of the Permian Delaware, in the southwest corner of that state...

elsewhere in Texas, there were two rigs added in Texas Oil District 1, but there were two pulled out of Texas Oil District 2, and there was also another rig pulled out of Texas Oil District 4; at least one of the removals was a natural gas rig pulled out of the Eagle Ford; the other changes in those 3 districts likely also involved the Eagle Ford, assuming there were concurrently offsetting changes of the same type of rig that wouldn't have showed up in the totals, which now show the Eagle Ford with 68 oil rigs and 3 natural gas rigs active....in addition, there was also a rig pulled out of Texas Oil District 9, which would account for the oil rig removed from the Barnett shale, and as we've already mentioned, a rig was added in the state's offshore waters..

in other states, Louisiana saw the five oil rigs added in the state's offshore waters, and a natural gas rig added in the Haynesville shale in the northwest quadrant of that state, while Oklahoma had four oil rigs pulled out of the Ardmore Woodford while two oil rig were added in the Cana Woodford...however, since the Oklahoma count was only down one, that means an oil rig was added elsewhere in the state targeting a basin not tracked by Baker Hughes...likewise, the rig pulled out of California was also from a basin not tracked by Baker Hughes...lastly, there was a natural gas rig pulled out of West Virginia's Marcellus, offsetting the natural gas rig added in Louisiana's Haynesville shale; as we've already noted, the eight rig natural gas decrease nationally all came out of ​the big ​Texas oil basins...

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