Sep 14, 2021 10:50 AM

News From the Oil Patch: Prices $20 higher than open of 2021

Posted Sep 14, 2021 10:50 AM


The Kansas benchmark at CHS closed out the month of August with an average price of  $57.96 per barrel, the best August average in McPherson in three years. Kansas prices are 20 dollars a barrel higher than at the first of the year. Kansas Common crude starts the week at $60 per barrel after gaining $1.50 on Friday.

U.S. crude futures prices rose above $70 Monday, after settling Friday at $69.72 per barrel.

Baker Hughes reported an increase of seven oil rigs, bringing its weekly Rotary Rig Count to 503 active rigs nationwide. Louisiana saw an increase of four rigs, while the count in Texas was up three.

The weekly Rig Count in Kansas was up one rig to nine active rigs in eastern Kansas. The count west of Wichita was unchanged at 25 rigs. Independent Oil & Gas Service reports drilling underway on one lease in Stafford County.

Kansas regulators approved 16 drilling permits last week. That makes 693 new drilling locations statewide so far this year. There are five new permits east of Wichita, and 11 in Western Kansas, including one in Stafford County.

Independent Oil & Gas Service reports 36 newly-completed wells across Kansas, 7 of them east of Wichita and 29 in Western Kansas, including one in Barton County, three in Ellis County, and two each in Russell and Stafford counties.

Shutdowns in the Gulf of Mexico contributed to a huge decline in U.S. crude production. August production in the Gulf of Mexico was down 300, barrels per day from July. The government said output for the week through September 3rd dropped to just over 10 million barrels per day, down more than one and a half million barrels per day from the week before, but still slightly better than last year at this time. EIA expects Gulf production to rebound by the end of the year.

U.S. crude inventories were down 1.5 million barrels last week and are about six percent below the five-year average for this time of year. EIA said imports were down half a million barrels per day but the four-week average is up more than 12 percent from a year ago.

Oil-by-rail shipments last week were down slightly from the week before, but largely unchanged from a year ago at 10,065 tanker cars hauling petroleum and petroleum products. The Association of American Railroads reports a slight weekly decline but another big jump year-over-year in Canada.

A consumer group investigating spikes in the price of natural gas during February's cold snap got some bad news last week from the Kansas Corporation Commission. The Natural Gas Transportation Customer Coalition was hoping to receive and make public the supplier invoices from utilities in the region as well as information from S&P Global Platts on its Daily Price Index. The group says ratepayers will soon be asked to pay more than $450 million for seven days of natural gas, and they blame price gouging. But the KCC says it does not have jurisdiction over federal market manipulation, and says all the key investigative bodies in Kansas already have access to the invoices from Kansas utilities. The Commission denied both requests for subpoenas. Kansas regulators have not yet approved any rate increases to pay for the February storm response.

A refinery in Texas suspended operations because of a shortage of oxygen brought on in part by a spike in COVID cases. Refineries use oxygen in their sulfur-recovery process to meet emissions standards. Bloomberg cites an environmental filing in Texas which says Citgo Petroleum halted some operations due to a higher medical need for oxygen in the area.

The U.S. Coast Guard said it was investigating nearly 350 reports of oil spills in and along the U.S. Gulf of Mexico in the wake of Hurricane Ida. The storm wreaked havoc on offshore oil production platforms and onshore oil and gas processing plants. More than a week after Ida made landfall on Aug. 29, about 88% of the region's offshore oil production remained shut, and more than 100 of the area's production platforms remained unoccupied.

The government says the amount of money we spent on energy in 2019 fell to $1.2 trillion, down five percent in real terms compared to the year before. The Energy Information Administration says total energy consumption fell by one percent, while average prices fell five percent. EIA reported per-capita energy spending in the residential, commercial, industrial and transportation sectors was down six percent.

The most controversial pipeline in the world could be open for business next month. Unnamed sources tell Bloomberg the Russian firm Gazprom plans to start pushing natural gas into Germany through the Nord Stream Two pipeline on October first. The last section of pipe was set to be lowered onto the seabed last week. The next step would be to connect the Danish and German sections before pre-commissioning work is carried out. The project still needs to receive technical certification, insurance, and approval from the German regulator. The long-awaited pipeline could provide some relief to European gas markets facing a supply crunch before the start of winter, with prices already at a record.