By JOHN P. TRETBAR
After falling just short of $74 on Friday, Nymex benchmark crude topped $75 Monday. Friday's settlement for the near-month contract was $73.98 per barrel. By Monday afternoon that price was up another dollar and a half. Crude prices have reached their highest in three years.
Goldman Sachs is calling Hurricane Ida the "most bullish hurricane" for oil prices in U.S. history. Shutdowns in the Gulf of Mexico have prompted reduced inventories, and have effectively canceled out the impact of the recent OPEC+ production increases. Forbes reports WTI and London Brent both reached their highest price since October of 2018, when sanctions against Iran drove prices to four-year highs. Analysts say prices could could continue rising in the months ahead, with cold winter weather and a busy travel season coming up.
The government reported the seventh consecutive weekly decline in U.S. crude-oil inventories, confirming industry predictions of another multi-million barrel dip. The Energy Information Administration says stockpiles September 17th totaled 414 million barrels. That's down three-and-a-half million barrels from the week before, and down 71 million barrels or 42% from the beginning of the year. In just the last two months EIA has reported weekly declines that total nearly thirty million barrels. The report says stockpiles are about eight percent below the five-year average for this time of year.
Texas energy regulators are limiting energy-related saltwater disposal in an area of the Permian Basin showing a spike in earthquakes. Data from the U.S. Geological Survey show that this year alone, there have been 81 earthquakes of magnitude 1.5 or greater in one seven-mile cluster north of Midland, Texas. There have been three temblors that you could actually feel, above magnitude 3.5, in the last year-and-a-half. A staff report at the Railroad Commission of Texas asserts that production-related saltwater disposal is contributing to the seismic activity. The Commission has stopped granting permits for new disposal wells there, and is requesting reductions of disposal volumes and monthly reports on injection data from operators in the Seismic Response Area. These limits are expected to remain in place for at least a year. The commission has identified 76 permitted wells impacted by the requests.
A government report last week outlined the dramatic cumulative effect of ongoing declines in crude-oil stockpiles. Stockpiles at Cushing are down 42% from the first of the year. That figure is 26% below normal, based on the five-year average. The Energy Information Administration reported a monthly decline of 35 million barrels in June, the largest such decline in 40 years of government record-keeping. EIA says the withdrawals in Oklahoma are consistent with those around the U.S. and around the world.
U.S. operators pumped more than 10.6 million barrels of crude per day last week, up more than half a million barrels per day from a week earlier. Production is down slightly from a year ago and well below record levels above 13 million barrels per day set in March of last year. The government report noted an increase of 700,000 barrels per day in crude-oil U.S. imports. Averaged over the last four weeks, EIA says crude imports are up nearly 19% from the same period last year. EIA said gasoline stockpiles last week dropped by three-and-a-half million barrels. Gasoline inventories are about three percent below the five year average for this time of year.
The Rotary Rig Count from Baker Hughes on Friday showed 521 active drilling rigs nationwide, an increase of ten oil rigs. The number of offshore rigs was up four over last week. The counts in Oklahoma and Louisiana were each up four. Texas was up three for the week.
The weekly Rig Count in Kansas from Independent Oil & Gas Service notes 26 active drilling rigs in Western Kansas, which is up one for the week. The count east of Wichita was unchanged at 12 active rigs. Operators are about to spud new wells in Ellis and Stafford counties, and drilling was underway on one lease in Ellis County.
Regulators approved 31 new drilling permits across the state last week. Fifteen of those were in in Western Kansas, including one new permit in Ellis County and three in Stafford County. There are 16 new permits on file in eastern Kansas. So far this year, regulators have okayed 763 new drilling locations in The Sunflower State.
Independent Oil & Gas Service reports 21 newly-completed wells across Kansas, seven of them east of Wichita, and 14 in the western half of the state. Kansas operators have completed 630 wells so far this year.
ConocoPhillips says it will use cash on hand to fund the $9.5 BILLION purchase of Royal Dutch Shell's assets in the Permian Basin. The deal will give Shell the equivalent of more than a decade's worth of cash flow from those assets. With additional daily production of about 200,000 barrels, ConocoPhillips becomes one of the basin's largest producers, rivaling Pioneer Natural Resources and Chevron.
Oil-by-rail traffic in the United States is up over last week, but down compared to a year ago. In Canada the reverse is true. The Association of American Railroads reports 10,494 tanker cars hauling petroleum during the week through September 18, up nearly 700 cars from the week before but down 3.6% from a year ago. In Canada crude-oil shipments by rail are up 12% year-over-year, but dipped slightly last week.