By JOHN P. TRETBAR
Continuing concerns over reduced oil demand because of the epidemic in China has prompted the so-called "OPEC Plus" countries to consider more cuts in oil production. Two OPEC sources and an industry source tell Reuters the cartel members are considering a further cut of half a million barrels per day.
The government reported an increase in domestic crude oil stockpiles. For the weekending January 24, U.S. inventories reached 431.7 million barrels, up 3.5 million barrels. The Energy Information Administration reported that inventories are about two percent below the five-year average for this time of year. EIA said U.S. crude production held steady last week at 12.984 million barrels per day, the same as the all-time record set the week before.
U.S. crude imports increased by nearly 230,000 barrels per day last week to an average of 6.7 million barrels per day. The four-week average is 6.6 million barrels per day, a decline of about 14 percent from the same four-week period last year.
U.S. crude prices have dropped nearly seven dollars a barrel in the last ten days. In morning trading Monday, the Nymex benchmark futures contract was down another 30 cents to $51.26 per barrel. London Brent was down 64 cents at $55.98. That's the lowest price for the international benchmark in more than a year.
Kansas Common crude at CHS in McPherson dropped 75 cents on Friday to end the month at$41.75 per barrel. That's up fifty cents from a week ago, but down nearly ten dollars from the first of the year. The average price for the month of January was $48.21. That's down more than six dollars from January-2019 average.
The government's latest reports show a slight drop in Kansas crude-oil production in November, to just over 2.61 million barrels, or about 87,000 barrels per day. That's down 109-thousand barrels from the month before and down 157-thousand barrels from November of 2018.
Independent Oil &Gas Service reports a 21% drop in the weekly Rig Count in Kansas.There are six active rigs in the eastern half of the state, down three rigs, and 17 west of Wichita, also down three. Drilling is underway on one lease in Russell County, and operators are preparing to spud one new well each in Barton and Ellis counties.
Baker Hughes reports 790 active drilling rigs across the U.S. a decline of one oil rig and a drop of three seeking natural gas. Texas was down two rigs.
There are 18 new drilling permits on file across Kansas this week, ten east of Wichita and eight in the western half of the state, including one in Barton County.
Independent Oil &Gas Service reports 30 newly-completed wells for the week, 98 so far this year. There were 12 new completions in eastern Kansas, and 18 west of Wichita, including four in Ellis County, one in Russell County and two in Stafford County.
An autopsy confirmed that a Great Bend died after he was overcome by hydrogen sulfide gas while working on an oil lease near the Barton/Stafford County line on Wednesday. Barton County Sheriff Brian Bellendir identifies the victim as 88-year-old Laverne Brown of Great Bend. Hydrogen sulfide is a toxic byproduct of oil and natural gas production and is common in the oilfields of central Kansas.
Oil-by-rail showed as light increase last week across the U.S. The Association of American Railroads reports 13,662 tanker cars hauling petroleum or petroleum products during the week ending January 25. That's an increase of two tenths of one percent over the same week a year ago. The cumulative average is up eight tenths of a percent. Oil by rail in Canada continues to grow, increasing more than 34% over a year ago.
The state-run oil company in Venezuela shut down its last two operating refineries there. PDVSA completely shut down one refinery on Saturday, and another on Monday, according to a technical report cited by S&P Global Platts. They blamed multiple refinery failures and a lack of crude oil to process. Venezuela holds the world's largest crude-oil reserves, but ongoing corruption and U.S. sanctions have crippled the country's energy infrastructure.