By JOHN P. TRETBAR
Natural gas prices surged more than 35% on Monday, after Russia announced it will keep its main gas pipeline to Europe shut indefinitely. Moscow said service on the Nord Stream Pipeline will not resume until what it called the "collective West" lifts sanctions imposed over the invasion of Ukraine. European gas prices jumped as much as 30% to levels 400% higher than a year ago.
Oil prices in August registered a third straight monthly decline, marking the longest losing run in more than two years. West Texas Intermediate lost more than 9% in August, the largest monthly decline since November. The US oil benchmark last week settled below $90 a barrel for the first time in two weeks. In daytime trading Tuesday, prices were over $86 per barrel for the near-month Nymex contract.
Gasoline stockpiles dropped by more than a million barrels last week, but retail prices continue their two-month cascade. Gasoline inventories are about 7% below the five-year average for this time of year according to weekly data from the government. Pump prices continued to drop, with the national average down to $3.77 per gallon Tuesday, according to the auto club Triple-A.
Baker Hughes on Friday announced a big drop in the number of drilling rigs actively seeking oil in the US. The Rotary Rig Count on Friday was 760 rigs. Of those, 596 were exploring for oil, down nine rigs from the week before. The weekly report shows 162 were drilling for natural gas, which is up four rigs. The count in Texas was down nine rigs, while New Mexico and North Dakota were each up two.
Independent Oil & Gas Service was scouting 483 wells in various stages of drilling or completion. So far this year, 211 Kansas operators have spudded 1,014 wells, up 61% from a year ago. The Rig Count in Kansas was unchanged in the eastern half of the state at 26 active rigs. The count west of Wichita was down one at 33 rigs. Drilling was underway Friday on a lease in Ellis County, and operators were about to spud new wells in Ellis and Stafford counties.
Kansas regulators okayed 35 new drilling permits across the state in the week through September 1. There were 20 in eastern Kansas and 15 in the western half of the state. Those include one new drilling location in Barton County and six in Ellis County. That's 1,108 new drilling permits so far this year, compared to 677 at this time last year. Operators completed 31 new wells last week in Kansas, 13 of them east of Wichita and 18 in Western Kansas, including one in Barton County. Independent Oil & Gas Service reports 1,064 new well-completions so far this year, which is nearly double the tally last year at this time.
The number of benchmark crude contracts that have not been settled, so called "open interest," recently dropped 26% to a seven-year low. That's drawn the attention of OPEC ministers and conspiracy theorists alike. Most analysts weighing in thus far agree with the government explanation, suggesting the decline reflects a wider drop in hedging activity.
The Energy Information Administration reports US crude-oil production last week rose by more than 100,000 barrels per day to 12.118 million barrels per day. Production a year ago was closer to 11.5 million barrels per day.
The government reported crude inventories dropped by another three million barrels. The tally as of August 26th was 418.3 million barrels, marking the third consecutive weekly decline. Stockpiles are about six percent below the five-year average for this time of year.
Gasoline stockpiles dropped by more than a million barrels last week, but retail prices continue their two-month cascade. Gasoline inventories are about 7% below the five-year average for this time of year according to weekly data from the government. Pump prices continued to drop, with the national average down to $3.84 per gallon, according to the auto club Triple-A.
US crude-oil imports dropped to six million barrels per day last week, down more than 200,000 barrels from the week before. Over the last four weeks crude imports are down about three percent from the same four weeks last year.
Shale producers in the United States are on course for their most profitable year on record, with earnings possibly reaching $200 billion this year. An industry consulting firm tells Bloomberg the worldwide oil patch is on target to generate a record $1.4 trillion of free cash flow.
Oil-by-rail traffic in the US is down 11% year-over-year. The Association of American Railroads reports 9,642 tanker carloads hauling petroleum in the week through August 27th, down 41 carloads from the week before. Canadian traffic was down more than 300 carloads for the week and more than six percent year-over-year.
The war over green investments escalated last week in Texas, where ten financial firms are now barred from doing business because they shun the oil patch. Comptroller Glenn Hegar is a Republican running for reelection. His office targeted banks and investment firms, as well as some funds within large banks such as Goldman Sachs and JP Morgan. They are no longer eligible for most contracts with state and local government entities. Earlier this year, Hegar sent inquiries to hundreds of companies requesting information about whether they were avoiding investments in the oil and gas industry in favor of renewable energy companies. State pension funds and local governments issuing municipal bonds will have to divest from the companies on the list, though there are some exemptions.
The state oil and gas regulator in Texas announced a new searchable database which includes all historic oil and gas production records dating back to the 1930s. In an announcement, the Railroad Commission of Texas said more than 1,300 rolls of microfilm containing about 2.2 million images were digitized for the project. Those original records are still available if you want to travel Austin, but the Commission says the digitized records can be searched and downloaded anytime and anywhere you have an internet connection.