By JOHN P. TRETBAR
National gasoline prices last week rose above $2 a gallon after more than two months below that mark. The U.S. average reached $2.10/gallon on Monday (6/15). AAA says prices rose nearly a dime on the week and more than a quarter over the last month, but remain more than half a dollar cheaper than a year ago. Kansas is one of 19 states below two dollars Monday, with a statewide average of $1.88 a gallon. We spotted $1.79 across Great Bend, and $1.86 across Hays. Filling up a 15-gallon tank will cost you about a dollar more than last week and nearly six dollars more than last month. But, you're still paying about eleven dollars less than you did a year ago.
The world’s largest oil exporter is getting serious about output reductions to prop up prices. Saudi Aramco is cutting prices and deliveries in Asia. Bloomberg reports seven Asian buyers will get between ten percent and forty percent less than they expected. Aramco also sharply raised its official Asian selling price for crude oil, erasing almost completely the discounts put in place during its price war with Russia. A new price list reveals the sharpest price hike in at least twenty years, which in turn followed the sharpest cut in prices in 30 years.
Kansas Common crude at CHS in McPherson starts the week at $26.50 a barrel, down more than $3 from a week ago and down more than $16 from a year ago.
Baker Hughes reports the drilling slowdown is slowing down, with the Rotary Rig Count down just seven oil rigs this week, compared to double-digit declines in weekly reports for the last three months. The count is down two in New Mexico and down one in Texas and Oklahoma.
Independent Oil & Gas Service reports a small increase in drilling activity in Kansas. The weekly Rig Count in Kansas shows two active drilling rigs east of Wichita, up two, and nine in Western Kansas, up five. They're preparing to spud one well in Rush County.
Regulators approved nine permits for drilling at new locations across Kansas, two of them in eastern Kansas and seven west of Wichita including one new permit in Barton County. The year-to-date total, 206 permits, is less than half the total at this point last year.
Independent Oil & Gas Service report 44 well completions during the last week, 13 in eastern Kansas and 31 in the western half of the state, with two in Ellis County and one each in Russell and Stafford counties.
A closely-watched government report offers some mixed predictions for the oil patch. The Energy Information Administration says U.S. production fell from a record 12.9 million barrels per day in November to just 11.4 million barrels per day last month. The agency's Short Term Energy Outlook for June predicts domestic output will continue to decline, down to 10.6 million barrels per day in March of next year, before starting to increase again by the end of 2020. EIA says global crude inventories will begin to decline this month, a month earlier than previously forecast.
Weekly U.S. crude production figures continue to slide. U.S. output dropped to just over eleven million barrels per day for the week ending June 5. That's down 120,000 barrels per day from a week earlier, and down more than a million barrels a day from the record heights reached a year ago.
U.S. crude inventories increased nearly six million barrels last week from a week earlier at more than 538 million barrels. In its weekly count, EIA says stockpiles are about 14% above the five-year average for this time of year.
The government says U.S. crude imports increased by 700-thousand barrels per day last week. The four-week average is down 13% from a year ago.
Crude-oil production in North Dakota dropped more than 200,000 barrels per day in April compared to March. The Department of Mineral Resources reports statewide output of 1.2 million barrels per day. For the first time, North Dakota has met its statewide goals to reduce gas flaring at oil wells. Operators were able to capture 88% of the natural gas produced at the state's prolific oil wells in April.
Oil-by-rail traffic last week was down nearly 28% year on year. The Association of American Railroads reports total freight-train traffic is down 15%. Only grain, farm, food and forest products did not report double-digit decreases compared to a year ago.
The Energy Information Administration says gasoline demand in March fell by 13% to its lowest level since January of 2000. From February to March, gasoline demand fell by 1.2 million barrels per day. Jet-fuel demand fell 15%, its largest monthly change since record keeping began in 1965.
The owners of the refinery in El Dorado, Kansas have agreed to pay a $4 million fine for violating federal clean air regulations. HollyFrontier agreed last week to make improvements to reduce emissions and improve risk-management practices. The case arose after the September 2017 release of a flammable hydrocarbon mixture, which caused a fire and the death of one employee.
The Trump administration has started giving energy companies temporary breaks on royalties and rent on public lands because of the coronavirus pandemic. In Utah those discounts cut the royalties normally headed to federal and state treasuries from nearly 13% to nearly 3%. More reductions are expected in other states, primarily in the western U.S. The Bureau of Land Management said last month that royalty-rate cuts were possible if companies could show they could not successfully operate economically or can’t maintain enough employees at drilling sites.