By JOHN P. TRETBAR
Eagle Communications
Crude prices have retreated from 13-month highs reached last week, dipping below $90 a barrel in New York Monday. The benchmark Nymex futures contract settled nearly a dollar lower on Friday and prices continued to crater on Monday, dropping to $89.38 per barrel by lunchtime. London Brent was also lower, fetching a few cents over $91 by midday Monday. Kansas Common crude at CHS in McPherson starts the week and the new month at $81 a barrel after dropping a dollar on Friday.
Despite near-record production, U.S. crude stockpiles are dropping. U.S. crude production averaged more than 12.9 million barrels per day for the third week in a row, marking the 12th-highest weekly production tally ever. But, the government reports another big drop in U.S. crude stockpiles. At just over 416 million barrels, the Energy Information Administration reported stockpiles dropped 2.2 million barrels from a week ago and are about four percent below the five-year average for this time of year.
The Energy Information Administration said imports rose above seven million barrels per day. Over the last four weeks, average imports are about eight percent higher than a year ago.
Baker Hughes reports a drop in drilling activity for the third straight week. The total of 623 active drilling rigs is down five oil rigs and two gas rigs from a week earlier. Texas was down eight rigs, Oklahoma was down two while New Mexico was up two. The breakout for horizontal drilling was down by five rigs.
The Kansas Rig Count from Independent Oil & Gas Service is up one to 25 rigs in western Kansas and unchanged at 12 rigs east of Wichita. Drilling was underway Friday on a lease in Russell County, and operators were moving in rotary drilling tools to spud a new well in Ellis County.
Operators spudded 958 new wells so far this year, down nearly 25% from a year ago.
Total footage drilled is down about 27% compared to a year ago. Kansas drillers completed 27 wells last week, with 14 of those in western Kansas. Independent Oil and Gas Service reports one new completion in Barton County and two in Ellis County.
Kansas regulators approved 24 new drilling locations last week, with two new permits in Ellis County and one in Stafford County. There are 21 new permits in western Kansas and three east of Wichita. So far this year, the state has issued 913 drilling permits, down 324 permits from the tally a year ago.
A new report from a trade group suggests the Lone Star State is setting new production records for oil, natural gas and natural gas liquids. The Texas Oil & Gas Association says the state now accounts for 43.2% of oil production in the U.S. and 28.5% of the natural gas. The group's chief economist says Texas oil production reached a 5.7 million barrels per day in August. That's up 200-thousand barrels per day from the latest official report.
Despite near-record production, U.S. crude stockpiles are dropping. U.S. crude production averaged more than 12.9 million barrels per day for the third week in a row, marking the 12th-highest weekly production tally ever. But, the government reports another big drop in U.S. crude stockpiles. At just over 416 million barrels, the Energy Information Administration reported stockpiles dropped 2.2 million barrels from a week ago and are about four percent below the five-year average for this time of year. EIA
The Energy Information Administration said imports rose above seven million barrels per day. Over the last four weeks, average imports are about eight percent higher than a year ago.
The Western price cap of $60 a barrel for Russian crude oil does not appear to be stopping them from demanding, and getting, quite a bit more. Russia has been able to avoid Western shipping and insurance companies since the imposition of the price cap and other sanctions. Reuters reports Russian-crude transactions have been going on since July with India and others at up to $20 per barrel over the cap.
The auto club AAA reported we may have reached our peak gasoline prices for the year. Prices across the U.S. Thursday were three cents lower than a week ago but still higher than a month ago. Diesel prices were slightly lower on the week, but 19 cents a gallon higher than a month ago.