By John P. Tretbar
OPEC is on the horns of a dilemma: dramatically increase production and thus drop prices, or face the loss of more of its members.
Now that crude-oil tanker traffic in the Strait of Hormuz is ramping up, member nations of the cartel are demanding big increases in their production quotas, and thus their profits.
The pressure led the United Arab Emirates to quit the cartel in April. Now it appears Iraq could be next, although they are backing off earlier comments made by their oil minister. Some analysts say raising quotas to the levels being demanded would drop prices as low as $40 a barrel.
Prices were up slightly in early trading on Monday, with WTI trading over $68 a barrel in New York, and London Brent topping $71. Kansas Common crude at CHS in McPherson starts the week at $59 a barrel.
The average price for June drops nearly $17 from May, to $71.45 per barrel. America responds to the war effort, and the war price-premium, to set another oil production record. US output reached it's highest monthly tally ever in April, according to the latest figures available from the Energy Information Administration.
At 13,934,000 barrels per day, April outpaced the previous record, set in March, by 238,000 daily barrels. The next best monthly average dates back to July of last year.
Each of the reporting states increased output in April, with the exception of Colorado, Oklahoma and Montana. Texas rises to its highest production average since November, and comes within 13,000 daily barrels of outpacing the next ten states combined. At 5.8 million barrels a day, the Lone Star State produces 42 percent of the national total. New Mexico rises to its highest monthly production tally ever at just under 2.4 million barrels a day.
Kansas output increased in April, by a thousand barrels to just over 66,000 barrels a day. US crude production this week drops slightly from a week ago, but remains above 13.8 million barrels for a third consecutive week.
The US added another 5.5 million barrels to the marketplace from our strategic stockpiles. The Strategic Petroleum Reserve now tops off at just over 408 million barrels, down 77 million barrels or 19 percent from a year ago.
Commercial crude inventories drop by 3.8 million barrels to just over 408 million as of June 26. US crude stockpiles have dropped every week since April to what is now the lowest weekly inventory report in nearly eight years.
The five-week average for this time of year is down seven percent from a year ago.Crude imports dropped by a quarter million daily barrels to just under 5.3 million barrels a day. The four-week average drops by 700-thousand barrels to just under five million barrels a day, down eleven percent from a year ago.
Crude exports drop by 700-thousand barrels a day to just over four million.
Imports from Canada have dropped steadily, from over four million barrels a day in the second week of May, to less than 3.5 million at the end of June. Imports from Venezuela continue to surprise given that country's recent earthquakes, with shipments to the US rising to 611-thousand daily barrels this week. The government reports no shipments from Iraq this week, but Saudi Arabia shipped some 56-thousand barrels a day.
The Rotary Rig Count from Baker Hughes is up five oil rigs and one gas rig nationwide for a total of 580 active rigs. The Texas count is up three rigs this week. Oklahoma is up two; North Dakota is down two. New Mexico and Louisiana are each up one rig. The national total is up 41 rigs from a year ago.Independent Oil and Gas Service reports a 20% monthly drop in the Kansas Rig count.
The count in eastern Kansas is down one at five rigs, while the tally west of Wichita is unchanged at eleven rigs. Drilling is underway or about to begin on leases in Rooks and Haskell counties, and two leases in Gove County.Kansas regulators report 100 new intent-to-drill permits in June, 448 so far this year. That's up 12 percent from a year ago. Barton County reports two new intents in June. Ellis County adds one. Russell County lists three new intents and Stafford adds one in June.
Expect more drilling soon in Gove County with six new intents, and eleven so far this year. Operators completed a new oil well in Ellis County this week, out of six well-completions in Western Kansas. The statewide tally so far this year is 406 wells, compared to over 600 wells at this time last year.Kansas regulators okay eight new drilling permits with five in Western Kansas, including one new drilling location in Rooks County.
The KCC has approved 394 permits for drilling at new locations so far this year. By this time last year the tally was just 363 wells.
India's oil imports from Russia are expected to hit a record high this month of about 2.7 million barrels per day, up more than half a million daily barrels from May. Russian oil accounts for more than half of India's overall imports, up from 36.5 percent in May. India is the world's third-largest oil importer, but Reuters reports shortfalls from the Middle East have prompted them to shop around.
An Oklahoma company that's already one of the biggest players in the natural gas industry is poised to get much bigger. The Williams Companies, based in Tulsa, are on the verge of buying Momentum Midstream, along with that company's four thousand miles of natural-gas pipelines, and its customer base of nearly 150 large-scale end-users.
Sources tell Bloomberg the deal is priced at $5.5 BILLION. Williams already handles about one-third of the natural gas used in American homes and power plants, with operations in the Gulf, the Rockies, the Pacific Northeast, and the Eastern Seaboard.