By JOHN P. TRETBAR
Kansas Common crude at CHS in McPherson starts the week at $23.50 a barrel after topping $20 for the first time in two months last week. Kansas prices are up from just $10 a barrel at the beginning of the month, but are down by more than half from the beginning of the year.
Efforts to ease the worldwide crude-oil glut appear to be working. EIA points out Baker Hughes reported the lowest weekly rig count in the history of the company, down 56% since March. U.S. shale operators are shutting down wells at an unprecedented clip. By next month, the OPEC-Plus agreement will remove from the market as much as 17 million barrels of crude oil per day, which Bloomberg says mark the deepest and fastest cuts on record. As a result, prices are up more than 70% in New York since the start of May.
Baker Hughes reported another big drop in its weekly Rotary Rig Count Friday, down 21 oil rigs nationwide to 318 active rigs. Texas was down 12, New Mexico was down three and North Dakota was down by two rigs.
Independent Oil & Gas Service reports the Kansas rig count was unchanged last week, with seven rigs west of Wichita and none in the eastern half of the state. Operators are preparing to spud a new well on a lease in Ellis County.
There are five new drilling permits in Kansas this week, 187 year-to-date, compared to 358 at this time last year.
Independent Oil & Gas reports 16 new well-completions across the state, two east of Wichita, and 14 in Western Kansas, including one in Barton County and one in Stafford County. Kansas operators have completed 376 wells so far this year.
Declines in oil-by-rail traffic in the U.S. outpaced the downturn across the entire rail/freight industry. Operators originated 9,787 rail tanker cars hauling petroleum and petroleum products during the week ending May 16. The Association of American Railroads says that's down 25.7% from the same week a year ago. AAR says total rail traffic declined 22%.
U.S. crude inventories dropped last week, but remain about ten percent above the five year seasonal average. EIA reports domestic stockpiles dropped five million barrels, to nearly 527 million barrels. The government reports a drop in production as well. Operators pumped more than eleven and a half million barrels of crude oil per day last week, down more than 100,000 barrels per day. Imports dropped nearly 200,000 barrels per day. The four-week average is down 25% from a year ago.
Despite sitting atop the largest oil reserves in the world, gasoline is a precious commodity in Venezuela because of U.S. and international sanctions. This week the first of five tankers arrived in Venezuela from Iran, another oil nation targeted by sanctions. The U.S. State Department told the New York Times that Venezuela's government is a criminal organization that used illegally obtained gold to buy fuel from Tehran. There's no word if the U.S. would try to block future shipments.