Jun 17, 2024

News from the Oil Patch: Crude prices rise to four-week highs

Posted Jun 17, 2024 9:34 PM
Photo by Pixabay
Photo by Pixabay

Eagle Communications

Crude prices rose to four-week highs Monday afternoon, with the near-month NYMEX contract for light sweet crude rising over $80 a barrel, and London Brent trading over $84.

Kansas common crude at CHS in McPherson starts the week at $68.75 per barrel, up three dollars from last week.

The Rotary Rig Count from Baker Hughes dropped by four oil rigs to 590 rigs nationwide. The tally in New Mexico was up one for the week. Texas and Louisiana were each down two rigs. Oklahoma was down one.

The Kansas Rig Count from Independent Oil & Gas Service is unchanged from a week ago with 13 active rigs east of Wichita and 19 in Western Kansas. The tally is down 27% from a year ago. Drilling was underway on Monday on a lease in Russell County and two more in Stafford County.

Regulators in Kansas approved 15 permits for drilling at new locations across the state last week, with seven west of Wichita including three in Barton County and one in Russell County. That's 435 new permits this year, compared to 622 a year ago.

Independent Oil & Gas Service reports 30 newly-completed wells statewide, 16 in western Kansas including two in Barton County, one in Russell County and one in Stafford County. That's 817 completions year-to date, compared to 817 by this time last year.

Shale-oil drilling in the United States last week dropped to a nearly three-year low. The national rig count from Baker Hughes was 594, the lowest total since January 4th of 2022. Bloomberg reports that productivity gains last year have prompted executives to slow activity amid a shrinking inventory of top-tier drilling locations, as well as industry consolidation and promises to return profits to shareholders. Total spending in North America is forecast to drop one percent this year, according to the report.

Those promised cost reductions have yet to impact workers in a significant way. Wages in the oil patch set a new record in April, according to a Labor Department report. Average earnings for top oil and gas workers rose by half a percent from March to $44.67 per hour. That's an increase of more than three percent from a year ago.

DOE makes another seven-figure paper profit refilling our strategic crude stockpiles. The Energy Department added another 300,000 barrels to the Strategic Petroleum Reserve, which rises to 370.5 million barrels. We’re paying $15 a barrel less than what we sold it for two years ago, and saving more than five billion dollars in the process. Commercial crude-oil stockpiles increased last week by nearly four million barrels to 459.7 million barrels. That’s four percent below the five year average for this time of year. Crude production was down slightly in Alaska, but up slightly in the lower 48 states. Total output for the week averages 13,225,000 barrels per day, up 100,000 barrels from last week.

Energy Information Administration reports a big run-up in crude-oil imports, and a big drop-off in exports. The Energy Information Administration reported a spike in crude-oil imports for the week, up 1.2 million barrels a day to over 8.3 million. The four week average rose more than 11%. Crude imports outpaced exports by more than five million barrels a day. Exports dropped last week. U.S. traders shipped out nearly 3.2 million barrels of crude per day, down more than a million barrels a day.

The number-three crude producing state continues to pump up output since their big winter downturn. North Dakota crude output in April rose about one percent to 1.24 million barrels a day, an increase of more than 11,000 daily barrels from the month before. That's up more than 130,000 barrels a day from January, when a winter weather event shut in nearly half the state's production. The North Dakota Department of Mineral Resources says the gas-capture rate remains at 95% with only five percent of well-head gas being flared or vented. Natural gas production rose three percent.