News From the Oil Patch: 'Systems issues' delay energy reports

By JOHN P. TRETBAR

Volatility ruled the crude oil markets last week. New York crude dropped nearly two dollars Thursday, adding to four-dollar losses the day before. But on Friday traders reversed course. Light sweet crude for August delivery on the Nymex was fetching more than $108 by lunchtime Friday, up more than four dollars. London Brent was up four percent at nearly $114 a barrel. Crude-oil prices for the week were down nearly eight dollars.

Kansas crude prices dipped to eight-week lows last week but spiked on Friday. Thursday's price at CHS for Kansas Common crude was down to $94.50 per barrel, the lowest in McPherson since May 10th. Prices were up $3.25 on Friday, and start the week at $97.75 per barrel.

The national average for a gallon of regular gasoline dropped more than eight cents in the last week, to $4.90. The auto club AAA says the average across Kansas is down six cents on the week to $4.59 per gallon. 

President Joe Biden wants Congress to suspend the national gasoline tax and urged states to cut theirs. Lawmakers of both major parties have expressed resistance to suspending federal or state gasoline taxes.

The government's closely watched Weekly Petroleum Status Report and several other scheduled information releases have been delayed indefinitely. An online advisory says the delays are the result of what the Energy Information Administration described as "systems issues." Weekly data we cover include US crude-oil production and imports, as well as crude and gasoline inventories. The EIA Web site has now posted advisories about pending releases coming out later this week.

Friday's Rig Count from Baker Hughes showed a spike in drilling activity. The company reported 594 active drilling rigs nationwide, up ten oil rigs and up three gas rigs. The count in Texas was up six rigs for the week. Colorado was up three rigs. Oklahoma and New Mexico were each up one.

The Rig Count in Kansas is unchanged, with eastern Kansas up two at 25 rigs, and Western Kansas down two at thirty rigs. Drilling was underway Friday on a well in Barton County. Operators were about to spud a new well on a lease in Stafford County. Independent Oil & Gas Service is scouting 403 wells compared with 201 at this time a year ago. Drilling activity based on 637 spuds is up 75% from a year ago.

Operators completed 11 wells across Kansas last week. Ten of those were west of Wichita including one newly-completed well each in Barton, Ellis and Stafford counties. The tally so far this year is up to 742 completions, compared to 358 at this time last year. Kansas regulators okayed 43 new drilling locations, 33 in eastern Kansas and ten west of Wichita. That's 759 new drilling permits so far this year, compared to 467 a year ago.

The Kansas Geological Survey reports Kansas crude-oil production for January and February totaled over 4.3 million barrels, or a little over 73,000 barrels per day. Output in Barton County was just shy of 4,000 barrels per day, while Ellis County averaged nearly 6,000 barrels per day. In Russell County operators pumped nearly 3,500 barrels per day. Stafford County checked in with nearly 2,400 barrels per day.

Canadian oil-sands producer Suncor Energy and Exxon Mobil are petitioning the US Supreme court, hoping once again to send a Colorado climate-change lawsuit from state court back to federal court. This is the latest in a tug-of-war over jurisdiction that has stymied action for years as municipalities across the country file lawsuits over the effects of emissions. Suncor is fighting an appeals court ruling sending Boulder County's case back to state court. It marks the first test of a Supreme Court decision last May that sent a slew of climate liability cases back to appellate judges. The Circuit Court rejected all six of the oil firm's claims to move the case to federal court, where the industry may face better odds. 

Oil-by-rail traffic was down slightly from last week but up slightly from last year. The Association of American Railroads reports 9,888 tanker carloads hauling petroleum or petroleum products in the week through June 18, down 149 tanker carloads from the week before, but up one percent from the same week a year ago.

Russia has overtaken Saudi Arabia as China’s top importer of crude oil as its once largest importer, the European Union, continues to shun Russian oil over the war in Ukraine. Fox Business reports China imported nearly 2 million barrels per day last month– a 55% increase from a year ago, and a nearly 20% increase from the month before. India is also scooping up Russian barrels, taking advantage of $30 discounts despite international sanctions. Iraq remains India's number-one supplier, but Russia has surpassed the Saudis to become India's second-biggest source of crude oil.

Disarray continues in the Libyan oil sector, complete with conflicting news accounts and fluctuating output reports. The Libyan Oil Minister told reporters output had stalled in recent weeks, dropping from 1.2 million barrels per day last year to 100,000 barrels per day earlier this month. But some fields came back online, and output is now reportedly up to nearly 800,000 barrels per day. Libya has Africa’s largest oil reserves, but production has been volatile since mid-April amid the most recent increase in political tension and protests at energy fields and ports. Observers warn that output in eastern Libya could soon be shut down entirely again due to protests. Output in the east has already slowed dramatically because storage facilities are full and protesters are denying tankers access.

Oil discoveries off the Atlantic coast of Namibia in southwestern Africa are bringing a wealth of change, and a change of wealth, to the newly independent republic. Bloomberg reports back-to-back announcements of huge offshore discoveries from Total and Shell. The finds could reach four billion barrels of recoverable crude. Explorers have drilled more than a dozen exploration wells over the last thirty years in search of oil and gas. The chairwoman of the country's state oil company says the two discoveries could bring in $5.6 billion, a boost of more than half the size of the entire economy of Namibia.