By JOHN P. TRETBAR
Kansas Common crude at CHS in McPherson starts the week at $30.75 a barrel, which is $3.50 higher than a week ago, but about $15 less than a year ago at this time.
U.S. motorists are enjoying the cheapest autumn gasoline prices in four years, and analysts say it's going to get cheaper. Some stations in Hays were down to $1.94 or less for a gallon of regular last week. We spotted $1.99 across Great Bend. Your 15-gallon fill-up will cost you about a dime less than last week, a dime more than last month, and about five dollars less than last year at this time. The AAA auto club says the statewide average in Kansas is $1.95 a gallon. We are one of eleven states below two dollars. Nationwide, the average pump price is just over $2.18 a gallon. That's the cheapest start to the month of October since 2016.
The active rig count in Kansas is up slightly. Independent Oil & Gas Service reports two active rigs in eastern Kansas, which is down one, and seven west of Wichita, which is up three for the week. Drilling is underway on one lease in Stafford County, and they're about to spud a new well in Barton County. Operators reached total depth at new wells in Ellis, Russell and Stafford counties last week and are evaluating the results.
Baker Hughes reports 269 active drilling rigs across the U.S., an increase of four oil rigs and a decrease of one natural gas rig. The count in Texas was up three. New Mexico was up one. Canada reports 80 active drilling rigs, up five for the week.
Kansas regulators approved another five drilling permits last week, all of them west of Wichita. That's 326 new permits so far this year, compared to more than 800 a year ago. Independent Oil & Gas Service reports seven completed wells across Kansas for the week, six of them in Western Kansas, including one in Ellis County. Operators have completed 676 wells across the state so far this year, down 37% from the total a year ago at this time.
EIA says weekly production increased last week by 215-thousand barrels per day over the week before, but remains more than a million barrels per day behind the average from a year earlier. Production for the week ending October 2 averaged 10.96 million [["ten point nine six million"]] barrels per day.
EIA reports U.S. crude inventories dropped by half a million barrels last week, dipping just below 493 million barrels. Stockpiles are about 12% above the five-year average.
The government reports crude imports increased last week by 600-thousand barrels per day, but the four week average remains 19 percent below the same four-week period last year.
The government now predicts a slight increase in crude prices for the fourth quarter of 2020, and says prices could rise another five dollars next year. The Energy Information Administration's Short Term Energy Outlook reports U.S. production has been rising steadily since reaching a two-and-a-half-year low in May. The latest confirmed production totals are from July, when we averaged 11 million barrels per day, up half a million barrels per day from June. The government's latest estimate pegs September production at 11.2 million [["eleven point two million"]] barrels per day.
The quarterly energy survey from the Federal Reserve Bank of Kansas City reveals some dire expectations within the oil patch. Over a quarter of the companies surveyed do not expect global oil demand to return to pre-Covid levels until the second quarter of next year. Most don't expect oil demand to fully rebound for up to two years.
There is mixed news from the nation's number two oil producer. Chevron's market value surpassed that of Exxon Mobil for the first time last week, as it closed a $4.1 billion all-stock deal for Noble Energy. But the company is now making all of its employees worldwide reapply for their jobs. About 15% of them are expected to get pink slips, including 700 in Houston. The layoffs are set to start October 23rd.
A strike that shut down about 8% of Norway’s oil and gas output will end after successful mediation talks. Bloomberg reports the settlement will restore production at six fields already shut down by the dispute and prevent an escalation to another six over the weekend. Those facilities pump about 130,000 barrels of crude oil and 43 million cubic meters of gas a day. It also averts the shutdown next week of Norway’s largest oil field.
The U.S. Environmental Protection Agency has approved a request from Oklahoma Gov. Kevin Stitt’s administration to allow the state, and not tribal nations, to regulate environmental issues on lands that may be inside historical tribal reservation boundaries. Stitt requested the authority in July, shortly after the U.S. Supreme Court determined that a large swath of eastern Oklahoma remains a Muskogee/Creek Indian reservation.
The U.S. set all-time records last year in the production, consumption and export of natural gas. The Energy Information Administration says dry natural gas production increased by ten percent, consumption was up three percent, and exports were up by nearly 30%.
The Association of American Railroads says total freight traffic in September was down one percent from a year ago. Some freight categories saw increases, including grain shipments, which were up nearly 28%. Weekly oil-by-rail totals are down nearly 13% from a year ago. For the week ending October 3, AAR reports a total of 10,428 rail cars hauling petroleum or petroleum products, down more than 400 cars from the last report.