By JOHN P. TRETBAR
Eagle Media
Crude oil prices hover at or near four-year lows.
Kansas Common crude starts the week at $48.25 per barrel, after dropping $1.25 on Friday. That's the lowest posted price at CHS in McPherson since October 16. The monthly average price drops to $49.57 per barrel. The last time that monthly average was less than $50 was in February of 2021.
U.S. futures prices have only dipped this low four times in the last four years. At just over $58 a barrel, near-month NYMEX crude was nearly a dollar lower on the day Friday, but about half a dollar higher than a week ago. Prices were nearly half a dollar higher by lunchtime on Monday.
U.S. crude production drops slightly from last week's all-time record, but remains above 13.8 million barrels per day for a second week in a row. The Energy Information Administration reports a weekly production average of 13,834,000 barrels per day, down 28,000 daily barrels from a week ago, but good enough for second-best. The four-week average sets a new record over 13.7 million, and cumulative production so far this year is at an all-time high just under 13.5 million barrels a day.
The Energy Information Administration reports another half million barrels added to the Strategic Petroleum Reserve, now just under 411 million barrels. That's up more than 46 million barrels since refill operations resumed in April of last year at $35 a barrel less than what we sold it for three years ago.
Commercial inventories dropped by 3.4 million barrels to just over 424 million. That's about five percent below the five-year average for this time of year.
After a major adjustment last week, crude-oil exports make a major readjustment this week. Crude exports jumped fifty percent, more than a million barrels a day, after a similar decline last week. Exports are over four million barrels a day after dropping below three million last week. The four-week average is up five percent at just under four million daily barrels.
Crude imports increased by 729,000 barrels a day to just under six million barrels a day. The four week average is down 16 percent from a year ago.
The Rotary Rig Count from Baker Hughes up up two oil rigs and two gas rigs for a US total of 554 active rigs. The breakout for horizontal rigs is up by five. The statewide tally in Wyoming is up three rigs.
The number of inactive, or "cold-stacked" drilling rigs is up by four across Kansas. The weekly Kansas Rig Count from Independent Oil and Gas Service is unchanged statewide, but down one active rig in eastern Kansas and up one west of Wichita. The total of 17 active rigs is down ten percent from a month ago and nearly 40 percent lower than a year ago. Drilling was underway on Friday on a lease in Finney County and another in Gove County.
Independent Oil and Gas Service reports 15 new well-completions this week, with eight in eastern Kansas and seven west of Wichita, including one each in Barton and Haskell counties.
State regulators okayed nine new drilling locations, with seven in western Kansas including two new permits in Stafford County. That's 607 new permits so far this year, compared to just over a thousand a year ago.
The world's third-largest oil and gas company is going all in on AI. Chevron has chosen a site in West Texas for its 5,000 megawatt natural-gas powered data center, in what Bloomberg calls a new line of business to capitalize on the boom in artificial intelligence. The announcement did not identify the end-user, or put a price on the project, but the company said it expects to make a final investment decision early next year, and could begin operations the year after that.
Western sanctions against Russia are kicking in in a very big way. Reuters reports sanctions are cutting Russia's oil and gas revenue by 35 percent to just under $6.6 billion dollars in November.
Meanwhile Bloomberg reports Russia is offering India its deepest discounts in two years. Most Indian refiners have skipped placing orders for Russian crude.
In an announcement last week, the Trump administration officially scrapped a drilling ban in the mammoth arctic landscape known as the National Petroleum Reserve-Alaska. The reserve is described as 23 million acres of tundra and wetlands, roughly the size of Indiana, teeming with wildlife, and an estimated 8.7 billion barrels of crude. The new policy reverses a Biden-era rule that blocked drilling on nearly half of the reserve.