BY JOHN P. TRETBAR
Kansas Common crude at CHS in McPherson starts the week at just $11.75 a barrel after dropping another dollar on Friday. Crude prices in Kansas are down $23 from the first of the month to their lowest level since 1975.
U.S. crude futures prices were down six percent in late morning trading Monday, briefly dipping below $20. The benchmark contract on the Nymex was down $1.30 to $20.21 per barrel. London Brent posted a ten percent drop, down $2.49 to $22.44 per barrel.
Oil traders are taking advantage crude oil's growing contango market, in which prices for future delivery are higher. Reuters reports traders chartered five supertankers in one day with an eye toward storing crude oil at sea. The vessels were booked for storage of at least three months.
Monday's gasoline prices were down to $1.47 a gallon at several outlets in Hays, and $1.69 across Great Bend. AAA says the national average is a little over a penny away from dropping below two dollars a gallon. U.S. prices are 11 cents cheaper than a week ago, 43 cents less than a month ago, and 68 cents less than last year at this time. The average across Kansas is $1.76.
Baker Hughes reported the biggest drop in recent memory in its weekly Rotary Rig Count, with 728 active drilling rigs across the U.S., a drop of 40 oil rigs. Most of the decline came in horizontal rigs, with the count in Texas down 29 rigs. Oklahoma dropped four rigs.
Independent Oil & Gas Service reports a slight drop in its weekly Rig Count in Kansas, with nine active rigs west of Wichita, down one. The count in eastern Kansas was unchanged at one active drilling rig. Kansas operators now list an additional six rigs as cold stacked in the yard.
Operators received just two new drilling permits last week, one in Rooks County and another in Cheyenne County. That brings the running total for this year to 159 permits, down from 195 at this time last year. Kansas operators completed 28 wells last week. The running year-to-date total is 302 completions compared to 420 at this time last year. Independent Oil & Gas Service reports one completion in Barton County, two in Ellis County, one in Russell County and one in Stafford County.
The government says U.S. crude oil stockpiles increased by 1.6 million barrels last week. Inventories are about three percent below the five-year seasonal average.
The Energy Information Administration says weekly crude production in the U.S. dipped slightly last week, after topping 13 million barrels per day the week before. For the week ending March 20, EIA reports total domestic production of 12.96 million barrels per day.
U.S. crude-oil imports dropped again last week. EIA says the four-week average is seven percent less than a year ago.
Unemployed oilfield workers in Canada could soon get jobs cleaning up abandoned wells. The Globe and Mail reports Federal and provincial lawmakers are saying little about the details of the $10 billion package, because negotiations continue. Energy CEOs in Alberta sent a letter to the Prime Minister asking for the government purchase of distressed assets, the suspension of the Canadian carbon tax and suspension of all income taxes at every level.
The Trump administration will continue to urge Congress to put up $3 billion to fill the Strategic Petroleum with U.S. Crude. The Senate removed the funding from last week's stimulus bill to break an impasse, but S&P Global Platts reports the administration views the purchases as relief for the patch and will continue to pursue the funding. The Department of Energy last week formally withdrew a solicitation to buy 30 million barrels of medium and heavy crude a day.
Weekly oil-by-rail shipments in the U.S. declined for the first time since January, amid a nine percent drop in total rail traffic. A spokesman for the Association of American Railroads says it wouldn't be a surprise to see rail volumes in many categories soften in the coming weeks as the response to the COVID-19 pandemic continues. But it appears we may have seen the worst of the impact of the virus on trade with Asia. U.S. operators filled 12,105 tankers with petroleum and petroleum products last week, a slight drop from a year ago. Oil-by-rail in Canada continues to grow, gaining nearly nine percent.
Reuters cites industry sources saying Saudi Arabia has yet to significantly boost its crude shipments. The kingdom planned to ship more than 10 million barrels per day starting in May. But so far, March exports are falling well short of that, which could reflect lower demand despite the big drop in prices. The Saudis have announced a huge new stimulus plan totaling $32 billion to support a populace hit hard by both the pandemic and the collapse of oil prices.