By JOHN P. TRETBAR
Crude prices rebounded from last week's huge selloff, in what appears to be a reaction to news about a possible COVID vaccine. After posting ten dollar per barrel losses last week, midday prices Monday were up nearly nine percent. The near-month Nymex contract for light sweet crude was up $3.29 to $40.43 per barrel. London Brent jumped $3.13 to $42.58 per barrel. Prices at CHS in McPherson on Monday reflected the selloff last week with Kansas Common crude fetching $27.50 per barrel. Analysts expect that to increase alongside the national and international benchmarks.
The government released its formal monthly tally of crude oil production through August, noting a slight increase in Kansas production, the third monthly increase in a row. Kansas output reached 2.32 million barrels in August, or nearly 75,000 barrels per day. Total U.S. production was down about 12 million barrels from July to just over 10.5 million barrels per day. That's down nearly 4 percent.
Independent Oil & Gas Service reports a pair of operators are about to spud new wells in Barton and Stafford counties. There are seven active drilling rigs in eastern Kansas, unchanged from last week, and eleven west of Wichita, up two. Baker Hughes reported a net increase of five active oil drilling rigs last week. Many states saw declines but the count in Texas was up six and New Mexico was up three.
Regulators approved six new drilling permits across Kansas last week, including four in Barton County. There are five new permits in Western Kansas and one east of Wichita, for a year-to-date total of 392.
Independent Oil & Gas Service reports 15 new well completions for the week, ten of them east of Wichita and five in Western Kansas, including a pair of dry holes in Barton and Ellis counties and a producing development well in Russell County. Operators statewide have completed 719 wells so far this year.
U.S. crude-oil inventories last week dropped eight million barrels from a week earlier. The Energy Information Administration reports total U.S. stockpiles dropped to just over 484 million barrels for the week ending October 30. EIA said Inventories currently stand about seven percent above the five-year seasonal average.
The government reported a slight decrease in U.S. crude production last week. The Energy Information Administration reports average output of nearly 10.5 million barrels per day. That's down more than 600,000 barrels per day from the week before, and is down more than two million barrels per day from a year ago.
Crude storage usage is at its highest level since spring. The EIA on Wednesday reported net stockpiles reached 76% of the storage capacity at Cushing, Oklahoma. That's the highest percentage since May 8.
EIA reports U.S. crude imports were down 600,000 barrels to five million barrels per day. Over the last four weeks, average imports were down more than 15% from the same period a year ago.
Weekly oil-by-rail numbers increased slightly last week, but continue to lag well behind last year at this time. The Association of American Railroads reports 10,202 tanker cars hauling petroleum or petroleum products for the week ending October 31. That's up 35 rail cars from the week before, but is nearly 20% behind the same weekly total last year. Total freight-train usage was up last month, posting a two percent increase over October of last year.
The State of New Mexico is considering some tough new emissions rules for the oil-patch. Regulators will hold a public meeting with about a week's worth of testimony beginning January 4. The new regulations would require the capture of 98-percent of natural gas emissions by the year 2026.
Shell announced last week that it is closing one of its refineries in Louisiana, after failed attempts to sell the facility. The refinery between Baton Rouge and New Orleans can process 240,000 barrels of crude oil per day. It employs nearly 700 employees and 400 contract workers, with layoffs starting later this month.
President Donald Trump surprised many last week with the removal of the chairman of the agency that regulates oil and gas pipelines and other energy infrastructure. Federal Energy Regulatory Commission. Chatterjee's term was set to expire next June. Axios reported his departure might have been hastened by a policy statement involving climate change issued in October.
The world's largest oil exporter is cutting prices. Saudi Arabia reduced most of its oil pricing amid a cloudy energy demand outlook. State-run Saudi Aramco cut prices for all U.S. grades by 20 cents per barrel, and cut Asian pricing by ten cents. Aramco raised prices by up to a dollar a barrel for customers in the northwest Europe and Mediterranean regions.
Libya's National Oil Corp, NOC, has now ended restrictions on the last crude-oil production facilities closed by an eight-month blockade. The country's output has skyrocketed since the settlement in its civil war. Reuters reported total production reached 800,000 barrels per day last week, up from just 100,000 barrels per day as recently as September.
In a sign of the times, oil major BP is in talks to sell its London headquarters. The Wall Street Journal reports the company needs cash to help cover debts.
Cascading oil prices may be about to get some relief from China. Bloomberg reports the world's biggest oil buyer has raised by 20% its quota for use of crude from overseas. That signals increased imports of about 823,000 barrels per day.
Net profit at the world's largest crude exporter fell more than 44% in the third quarter compared to a year earlier. Saudi Aramco saw quarterly earnings drop from over $21 billion to $11.8 billion dollars, due to the continued collapse of demand and prices.