By JOHN P. TRETBAR
What a difference a denial makes. Near-month WTI in New York settled Friday just over $80 per barrel. On Monday morning, news accounts of a purported production increase by the OPEC-Plus exporters ahead of the EU's Russia-embargo sent prices to the sub-basement. Crude was down more than five percent by mid-morning Monday to just under $76 per barrel on the NYMEX and just under $83 on London's ICE Exchange. But the Saudis denied the report, and traders quickly bought into what then became bargain futures contracts. By lunchtime prices were over $79 a barrel in New York and over $86 in London. The earlier news report pushed Brent crude into contango, an industry term for when current prices are cheaper than contracts for later delivery.
Kansas prices dropped $2 last Wednesday, another $3.75 last Thursday, and $1.75 on Friday. Kansas Common crude at CHS in McPherson starts this week at $70.25 per barrel.
You're forgiven if you say "here we go again." The government will once again list the lesser prairie chicken as threatened in Kansas, and endangered in parts of Texas and New Mexico. The listings trigger land-management regulations and other protections under the Endangered Species Act which have in the past proven odious in the oil patch and on farmland throughout the region. The last time the grouse was listed was back in 2014. The oil and gas industry spearheaded a widespread fight, which they won in court.
Regulators are investigating one of the strongest Texas temblors on record, a 5.4 magnitude earthquake in the oil country of the West Texas desert. In San Antonio, hundreds of miles away, quake damage shut down an old hospital building. Inspectors are looking at SWD permits and could place stricter limits on disposal wells in the area around Pecos, Texas, according to a news release from the Railroad Commission of Texas, the state's energy regulator.
Kansas operators have spudded 1,404 wells so far this year, up 46% from last year at this time. Independent Oil & Gas Service is scouting 537 wells in various stages of drilling and completion, up more than 40% from a year ago. The Rig Count in Kansas is up three in the eastern half of the state at 22 rigs, while the count in Western Kansas was unchanged at 30 active rotary drilling rigs. Drilling was underway Friday on a lease in Barton County and another in Ellis County. Operators completed 22 new wells last week, including one well in Barton County out of ten completions in Western Kansas. Kansas regulators approved 28 permits for drilling at new locations last week, including two in Ellis County, one in Russell County and two in Stafford County.
U.S. crude-oil production last week increased by 20,000 barrels per day over the week before. At 12.148 million barrels per day, U.S. output is more than 700,000 barrels per day ahead of last year at this time. The Energy Information Administration says domestic crude inventories were down more than half a million barrels. The tally as of November 11th was 435.4 million barrels, or about four percent below the five-year average for this time of year.
U.S. crude imports last were down 895,000 barrels per day compared to the week before. Over the last four weeks, we've imported 6.1 million barrels per day, or about 1.3% less than a year ago.
National gasoline prices Thursday (11/17) were 16 cents a gallon cheaper than a month earlier. The government reported gasoline inventories were up 2.2 million barrels, but remain about 5% below the five year seasonal average. Diesel prices remain six cents higher than last month and about $1.70 higher than a year ago. Diesel fuel stockpiles are more than a million barrels higher than last week, but are about 15% below the five-year average. The average Kansas pump price for regular gasoline was $3.36, while diesel was fetching $4.87 a gallon.
Domestic oil-by-rail shipments increased by 267 carloads last week but are slightly behind last year at this time. Canadian traffic was also up slightly for the week, but was down 8.6% from the tally a year ago, according to the Association of American Railroads.
A natural gas export facility on the Texas Gulf Coast told buyers it would likely cancel shipments to Europe scheduled in November and December. According to a report from Bloomberg, repairs and regulatory approvals continue as Freeport-LNG prepares to restart operations after an explosion and fire in June. The facility once accounted for about 15% of U.S. export shipments of Liquefied Natural Gas. Meanwhile, the company is fighting back against apparent campaign of bogus news releases on company letterhead suggesting a much more drastic shutdown.
Moscow may have found an important new outlet in the United Arab Emirates for some of its crude shunned by traditional buyers in Europe following the invasion of Ukraine. Bloomberg tracking data show a delivery of 700,000 barrels of Russian crude to a refinery in Abu Dhabi earlier this month.