By JOHN P. TRETBAR
A two-month spike in U.S. crude-oil supplies and a three-week spike in U.S. rig counts pushed the U.S. crude benchmark below $80 on Monday for the first time since October. U.S. crude inventories rose last week, for the third week in a row and the fifth time in a month. The latest report from the government is due Wednesday, following an industry report expected the day before. Last week's rig counts marked the third increase three weeks.
December Nymex crude prices settled Friday three dollars lower, the lowest close for WTI in five weeks. Light sweet crude on the Nymex was down to $79.95 per barrel by lunchtime Monday. London Brent drops 94 cents to $81.23 per barrel.
Kansas prices start the week at $71 a barrel. CHS in McPherson dropped the price for Kansas Common by 75 cents on Friday. Prices are half a dollar lower on the week and more than three dollars lower than at the first of the month. A year ago the Kansas benchmark was forty-one dollars lower.
U.S. crude inventories rose for the third week in a row. The Energy Information Administration reports total stockpiles of just over 435 million barrels on November 5th. That's up about a million barrels from a week earlier, but about seven percent below the five-year average for this time of year.
The government reported a slight increase in domestic crude production. U.S. operators pumped just over 11.5 million barrels per day during the week through November 5th. That's an increase of about 10,000 barrels per day over the week before and about a million barrels per day over a year earlier.
EIA reported crude imports of 6.1 million barrels per day last week, down 63,000 barrels per day. The average over the last four weeks is about 14% higher than the same four-week period last year.
Gasoline stockpiles dropped by 1.6 million barrels last week, and are about four percent below the five-year seasonal average.
The auto club AAA reports higher gasoline pump prices brought on by slight increases in demand and the high price for a barrel of crude. But they say shorter days under Daylight Saving Time could lower gasoline demand, and possibly bring down pump prices. The national average last Thursday (11/11) was just over $3.41 per gallon. That's up more than 14 cents per gallon over a month ago. The average across Kansas, $3.11 per gallon, is up about 13 cents from last month. Filling your 15-gallon tank will cost you nearly four dollars more than a month ago, and $17 more than a year ago.
Kansas operators completed 25 wells last week 11 in eastern Kansas and 14 west of Wichita, for a year-to-date total of 778. That's a slight improvement over the weekly report from a year ago, which showed 728 completions.
Kansas regulators approved 25 new drilling permits last week, 16 in eastern Kansas and 9 west of Wichita, including one new permit in Barton County. That's 991 new drilling locations so far this year, compared to 406 a year ago at this time.
This week's Rig Count in Kansas is down slightly, with 13 active drilling rigs in the eastern half of the state, which is down two, and 27 west of Wichita, which is up one for the week. Drilling was underway on a lease in Ellis County, and operators were about to spud a new well in Barton County.
This year, demand for petroleum has largely returned to the pre-pandemic levels of two years ago. In a new report, the government says demand has grown faster than supply, reducing inventories and contributing to higher prices for crude oil and petroleum products. The Energy Information Administration says the price of West Texas Intermediate crude is near its highest level since 2014. WTI on November first was up $37 per barrel compared to the beginning of the year. Likewise, the price of Brent crude, the European benchmark, was up $34 over the same period. U.S. crude oil inputs at domestic refineries have nearly returned to the 2019 level for this time of year, despite several refinery closures since 2020. By contrast, crude production has been slower to return. Output fell from a record from an average 12.3 million barrels per day in 2019, to about 9.7 million in May of 2020. Current production is just over 11.5 million barrels per day.
Oil-by-rail traffic in the U.S. was up for the week but down from a year ago. The Association of American Railroads reports 10,010 carloads hauling petroleum and petroleum products. That's up 452 tanker carloads from the week before but down four percent from the same week in 2020. Canadian traffic was up more than 500 carloads for the week, and up more than eleven percent over a year ago.
The government reports steady increases in both crude-oil production and consumption. The Energy Information Administration says U.S. output spiked dramatically last month, following the hurricane recovery. EIA now predicts production will reach 11.6 million barrels per day in December. The agency's Short Term Energy Outlook estimates global petroleum consumption reached 98.9 million barrels per day in October, an increase of 4.5 million barrels per day from a year earlier. The report forecasts a 5.1 million barrel-per-day increase in consumption for the entire year.
Energy regulators in Texas cleared the way under a new state law to pay out some $3.4 BILLION to natural gas companies for a dramatic price increase during the recent cold snap and power-grid failure. The money is part of the debt Texas utilities incurred after gas prices skyrocketed during February's winter storm and blackout. The Railroad Commission of Texas voted to convert those debts into low-interest bonds guaranteed by the state. The cost of those bonds may be included on Texans’ gas bills for up to the next 30 years.
The Biden administration is taking steps to block oil and gas leasing within a 10-mile radius around New Mexico’s Chaco Canyon, a site considered sacred to Native Americans. The White House said on Monday that the Interior Department is considering a 20-year withdrawal of federal lands within 10 miles of Chaco Culture National Historical Park. Such a move would prevent oil and gas leasing and development in the northwestern corner of the state. New Mexico is second only to Texas in state crude-production rankings, but the lions share of the production comes from the Permian Basin, more than 400 miles away in the southeastern corner of the state.
Saudi Arabia last week announced it's raising prices to customers in Asia. The increases are bigger than expected and were propping up prices elsewhere. Saudi Aramco raised its Official Selling Price to its highest level since September.