By JOHN P. TRETBAR
The August contract for light sweet crude on the Nymex posted big gains on Friday, up nearly three dollars a barrel to settle at $108.43 per barrel. But by Tuesday the bottom fell out. Crude futures prices on Tuesday were down eight percent in New York and nine percent in London. New York prices fell to eight-week lows, dipping below $100 per barrel for the first time since May 11. In lunchtime trading the benchmark Nymex contract was down nearly nine dollars to $99.67 per barrel. London Brent was down more than ten dollars to $103.15 per barrel.
The auto club AAA says fewer Americans fueled up over the last two weeks and that has helped drop pump prices by eight cents in the last seven days. The national average price for a gallon of regular gasoline Tuesday was $4.80. Motorists in Kansas were paying $4.55, about four cents less than last week.
The United States Supreme Court dealt a blow to the Administration's climate-change agenda. The court said the Administration does not have the legal authority to force power plants to shift away from fossil fuels to cleaner sources. The high court says it is up to Congress to give the EPA that authority.
Kansas regulators posted 201 new intent-to-drill notices last month. That's 851 new notices so far this year compared to 540 through the first half of last year. There are three new intents in Barton County, three in Ellis County, two in Russell County, and one in Stafford County.
The Rig Count in Kansas from Independent Oil & Gas Service increased slightly, with 32 active drilling rigs in Western Kansas, up two rigs. The count east of Wichita was down one at 24. There are two new drilling permits in Russell County this week, out of 29 in western Kansas and 42 statewide. Midway through this year there are 801 permits for drilling at new locations, compared to 483 by the end of June last year. Operators completed 29 wells during the week through June 30th, all of them in Western Kansas. IOGSI reports 672 spuds in the Kansas oil patch at the midway point this year, and is currently scouting oilfield activity at 388 well sites across the state. The spud count is up 74% from last year.
The weekly Rotary Rig County from Baker Hughes dropped slightly, with 750 active drilling rigs, with gas rigs dropping by four and oil rigs up one. The count in Texas was down two, although the count in the Eagle Ford play of South Texas was down four rigs. New Mexico was up one for the week.
U.S. exports of crude oil and petroleum products reached a record of 9.8 million barrels per day during last month, based on a four-week rolling average through May 27th. The Energy Information Administration said exports of crude oil, finished motor gasoline, and distillate fuels have all increased since the beginning of 2022, partly due to increased demand from Europe, although they all remain below their record highs.
Oil-by-rail traffic in the US is down just over three percent from year ago. The Association of American Railroads reports 9,884 tanker carloads for the week through June 25th, down four tankers from a week earlier. Canadian traffic rose 613 carloads for the week. The current tally in Canada is up 15% year-over-year.
The Energy Information Administration reported output for the week through June 24th reached 12.129 million barrels per day, the highest weekly average since April of 2020. Tallies from the week before were delayed by what were called systems issues that blocked or delayed several regular government reports. EIA now says output for the week through June 17th averaged just over 12 million barrels per day. The all-time record weekly production report from EIA dates back to February of 2020, when the average reached 13.174 million barrels per day.
US crude inventories dropped by 2.8 million barrels last week, to 415.6 million barrels as of June 24th. The Energy Information Administration says stockpiles are about 13% below the five-year seasonal average. Total motor gasoline inventories increased by 2.6 million barrels last week and are about 8% below the five-year average for this time of year.
EIA reports crude imports dropped 200,000 barrels to six million barrels per day. The four week rolling average show imports 5.1 percent lower than the same four weeks last year.
Houston-based pipeline company Targa Resources has agreed to acquire Lucid Energy, one of the largest natural gas processors in the Permian Basin, in a deal valued at $3.55 billion. Lucid gathers, treats and processes natural gas in the Delaware Basin, the portion of the Permian Basin that straddles West Texas and New Mexico. The firm has natural gas processing capacity of around 1.4 billion cubic feet per day.
A trade group says Texas employment in the oil patch dropped for the first time in four months. According to the Texas Independent Producers and Royalty Owners Association (TIPRO), direct employment in exploration and production for May was over 188,000, down 1,400 jobs from April but still an increase of 25,500 positions over a year earlier. The group the industry payed $666 million in severance taxes in April, the highest in history and nearly double the total paid in April of last year.
President Joe Biden said he’ll ask U.S. allies in the Persian Gulf region to boost oil production when he meets with them during a trip to Saudi Arabia next month. But recent news accounts indicate that is not something that can happen quickly. According to its own market analysis, the so-called OPEC-Plus crude export alliance is now half a billion barrels behind in its pledge to increase supplies. That's 2.7 million barrels a day below their collective output targets. Last week, the UAE and Saudi oil ministers told world leaders and energy ministers they're already pumping about as much as they can.