By JOHN P. TRETBAR
Crude prices on Monday dropped nearly two percent from three-year highs reached last week. Nymex benchmark crude futures settled over $74 Friday, but dropped more than a dollar by lunchtime Monday. The near-month contract for light sweet crude was trading at $72.79 per barrel. Kansas crude prices gained another 75 cents on Friday. Kansas Common crude at CHS in McPherson starts the week at $64.25 per barrel. That's up more than four dollars a barrel from the first of the month and more than $25 higher than prices at the first of the year.
Operators in Kansas completed seven new wells last week. Independent Oil & Gas Service says there were three in eastern Kansas and four west of Wichita. That brings the total so far this year to 358 completed wells. Kansas regulators okayed 51 new drilling permits for the week, 28 east of Wichita, 23 in Western Kansas, and 467 so far this year. There are two new permits in Barton County and four in Ellis County.
Baker Hughes reported 470 active drilling rigs across the U.S. The aggregate count is unchanged, with an increase of one gas rig offsetting a decline of one rig drilling for oil.
Independent Oil & Gas Service reports a slight increase in the Rig Count in Kansas. There are seven drilling rigs at work in eastern Kansas, which is up three for the week. West of Wichita the count dropped by one, to 22 active rigs.
US crude inventories dropped for the fifth week in a row. The Energy Information Administration reports US stockpiles dropped 7.6 million barrels to just below 460 million. EIA says inventories are about six percent below the five-year average for this time of year.
US Crude production dropped slightly last week but remains above 11 million barrels per day for a second week in a row. Output reached 11,145,000 barrels per day for the week ending June 18. That's down 101,000 barrels per day from the week before, but is nearly 200,000 barrels ahead of the same week a year ago.
The government reported a slight increase in US crude imports last week, to 6.9 million barrels per day. Average imports over the past four weeks are slightly lower than the same period last year.
Crude oil in storage at Cushing, Oklahoma reached its lowest percentage of capacity since March of 2020 according to the latest government report. Analysis published by Bloomberg News suggests another round of rising prices could be on the way if inventories continue to drop. Crude stockpiles in the storage hub at Cushing, Oklahoma are falling to historic lows, thanks to a surge in demand outpacing crude production. Cushing inventories fell nearly 4 million barrels in the last two weeks to their lowest level since the pandemic forced the country into lockdown. U.S. shale production is still 15% below its pre-pandemic peak and imports from Canada are running low, fueling a growing consensus that prices are set to surge again.
The Oklahoma Corporation Commission last week elected Commissioner Dana Murphy as Chairman, effective July 1. According to an OCC news release, Commissioner Murphy is a 5th generation Oklahoman, a geologist, and an attorney. Prior to taking office as a Commissioner she served as a Commission administrative law judge in addition to working as geologist and attorney in the private sector. Murphy has been a Commissioner since January 2009 and was elected to her latest term in 2016. This will be Murphy’s third term as Chairman. The Commissioners also elected Commissioner Bob Anthony as vice chairman. Anthony first took office in January 1989. Oklahoma Corporation Commissioners hold statewide elected office, and are now limited to two six-year terms. The Oklahoma Corporation Commission oversees the state’s energy, transportation and utility sectors.
According to a new government report, the State of New Mexico pumped it's best total crude oil and natural gas output ever. Total crude output in New Mexico reached nearly 36-million barrels in March, making it the number-two producing state in the country, outpacing North Dakota by more than 128,000 barrels per day. According to EIA's latest totals, Kansas produced nearly 2.4 million barrels in March, or nearly 77,000 barrels per day.
New Mexico set a milestone in oil-patch regulation recently. For the first time regulators there have made it illegal for drillers to spill oil, saltwater or other oil-field liquids. Up until a couple of weeks ago, it wasn't against the law. Industry representatives told the commission that leeway should be given to operators who sustain spills because of weather events, vandalism, equipment breakdowns and other things beyond their control. Critics argued that the previous rules were inadequate and relied on an honor system that many operators violated. Regulators approved the new rules by unanimous vote.
Oil-by-rail traffic across the U.S. was down for the week but nearly four percent higher than a year ago. The Association of American Railroads report 9,785 tanker cars hauling petroleum or petroleum products during the week ended June 19.
The Canada Energy Regulator is now allowing Trans Mountain Corp. to resume work on its oil pipeline expansion project. The company hopes to nearly triple the amount of heavy crude it moves from the oilfields of Alberta to Canada's Pacific Coast. A court-order protecting hummingbird nests in British Columbia shut down work on the project in April. The $10 billion expansion will pump up capacity to 890,000 barrels per day. The company expects to complete the expansion project late next year.