By JOHN P. TRETBAR
Crude prices were higher Monday on expectations of a big output cut from the OPEC+ producers later this week. The group planned to meet by conference call, but will now meet in person for the first time since the pandemic. Prices jumped five percent Monday morning, with the near-month Nymex contract for light sweet crude trading $4 higher at $83.56 per barrel. London Brent was trading over $88, up 4 percent on the day. It was a different story in New York Friday, where the benchmark contract settled nearly $2 lower to end the month of September at $79.49 per barrel. That's $10 a barrel lower than at the end of August. It marked the first quarterly loss in futures prices in two years.
Kansas Common crude starts the week at $69.75 per barrel at CHS in McPherson, after dropping $1.75 on Friday. The average price for September was $74.28 per barrel, down more than $2 from the first of the month.
U.S. crude production for July topped 11.8 million barrels per day, an increase of a tenth of a percent from the month before. The government reports Kansas output rose to 2.5 million barrels or 81,000 barrels per day. The Energy Information Administration says that's more than four percent higher than Kansas production in July of last year. Output in Texas increased nine-tenths of a percent over the month before to top five million barrels per day. Rounding out the top five are New Mexico at 1.5 million barrels per day, North Dakota at just over 1 million, Alaska at 432,000, and Colorado at just over 420,000 barrels per day.
The final report on Hurricane Ian from the U.S. offshore energy regulator shows the storm forced the evacuation of 11 production platforms and five drilling rigs in the Gulf of Mexico, while another three rigs were moved out of the storm's path. New analysis from the Bureau of Safety and Environmental Enforcement shows the storm shut-in just over nine percent of the oil production and nearly six percent of the natural gas output in the Gulf.
The Rotary Rig Count from Baker Hughes was up two oil rigs and down one rig exploring for natural gas. The count in Texas was down two rigs while New Mexico was up two. Oklahoma was down one for the week.
The Rig Count in Kansas is up one rig over last week, with 28 active rigs in eastern Kansas, and 32 west of Wichita. Operators on Friday reported drilling ahead on two leases in Ellis County and one in Stafford County. Independent Oil & Gas Service is scouting 494 wells in various stages of drilling and completion. Operators have spudded 1,237 wells so far this year, up more than 56% over last year. Some 227 operators have spudded new wells in Kansas since the first of the year, up nearly 16% from last year at this time.
Kansas regulators okayed 43 new drilling locations across the state last week. That's 1,237 new drilling permits so far this year, compared to 784 by the end of September last year. There are 27 new permits east of Wichita, and 16 in Western Kansas, including one each in Barton, Ellis, Russell and Stafford counties.
Operators completed 23 new wells across Kansas last week, according to Independent Oil & Gas Service, with 15 in eastern Kansas and eight in the western half of the state. That's 1,209 new completions so far this year, compared to 648 by this time last year.
The government says U.S. crude inventories dropped 200,000 barrels to 430.6 million barrels as of September 23rd. That's about 2 percent below the five-year average for this time of year. Gasoline stockpiles dropped 2.4 million barrels and are about 6 percent below the five-year seasonal average.
EIA said U.S. crude production dropped by 96,000 barrels per day last week, but remained above 12 million barrels per day for the ninth week in a row. Output is nearly a million barrels per day higher than a year ago. Imports dropped by half a million barrels to 6.4 million barrels per day. The four-week average is 5.6% higher than imports during the same four weeks a year ago.
Oil-by-rail traffic in the U.S. dropped to 9,404 tanker carloads last week. The Association of American Railroads says that's down 848 carloads from the week before and a 10 percent decline from the same week last year. Traffic in Canada was up for the week but remains nearly two percent behind the tally last year at this time.
A North Dakota law tying tax rates to oil prices is once again causing headaches for budget forecasters there. The state's oil extraction tax rate rose from 5 to 6 percent earlier this year when prices topped the trigger price of $94.69 per barrel for three consecutive months. Current prices are below that trigger and have been through August and September. If the average price in October is also below the trigger price, the tax rate drops back to 5 percent starting in November. According to the Bismarck Tribune, the state collected revenue increases of more than $59 million from June and July production due to the oil tax trigger being in effect.