By JOHN P. TRETBAR
Eagle Media
Renewed conflict in the Middle East sent crude prices up like an Iron Dome, and then down like a retaliatory strike. US futures prices ended the day Friday five dollars higher, posting a weekly gain of $8.40 and nearly topping $73 per barrel for the first time since February. Offers overnight rose over $77 a barrel, a six-month high, before retreating. By midday Monday the benchmarks were down four percent from Friday's close, with New York crude trading below $70 and London Brent dropping toward $71.
The crude-oil choke point at the Strait of Hormuz remained open, according to a weekend report, but Israeli media reported Iran considered closing it. The UK's Maritime Trade Operations advised of increasing electronic interference in the Strait, as well as throughout the region. MTO said it was having a significant impact on the positional reporting technology of crude tankers and other vessels navigating the narrow waterway.
Kansas prices followed the national markets last week. At CHS in McPherson, Kansas Common crude jumped five dollars Friday to $63.25 per barrel. That's the highest price since January.
Kansas regulators gave their okay to 16 new drilling locations, including two in Barton County out of 12 in Western Kansas. The 308 new permits this year trail the tally a year ago by 127 permits.
So far this year, 107 active licensed operators have drilled wells in Kansas, down 28% from a year ago. Overall, drilling activity is down 32% year-over-year. Independent Oil and Gas Service reports five new well completions in Western Kansas out of eight statewide. That's 546 completed wells this year, compared to 599 a year ago. The Kansas Rig Count is down nearly eight percent from last week, 48% lower than last month, and 62% less than a year ago. IOGSI reports ten active rigs in Western Kansas, which is up two from a week ago
The Rotary Rig Count from Baker Hughes shows 555 active drilling rigs nationwide. That's down one oil rig and three gas rigs. The tally for horizontal drilling rigs is down three. The count in Texas is down two. New Mexico and Oklahoma are each down one.
The government says our ability to respond to spiking energy demand is improving through increases in natural gas storage capacity. According to the latest government data, both working storage and peak capacity increased last year. Peak capacity rose nearly two percent or 70 BILLION cubic feet. Working capacity increased by three BILLION cubic feet or about a tenth of a percent.
The Kansas Geological Society last week recognized and named two new oil fields in Kansas, based on completed wells reported in April and May. They are located in Ness and Sherman counties. That's nine new fields so far this year.
Crude production in the US increased again last week but remains below 13.5 million barrels per day. Output has not topped 13.5 million barrels per day since the week ending March 28. Four-week average production is up more than two percent at just over 13.4 million barrels per day. Production so far this year averages 13.465 million barrels per day. That's also up two percent.
Commercial inventories dropped by 3.6 million barrels last week to just over 432 million. The Energy Information Administration reports stockpiles as of June 6 are about eight percent below the five-year average for this time of year.
The government reports delivery of another 200,000 barrels of crude oil for the Strategic Petroleum Reserve. The US Treasury this week realizes another $5.8 million in paper-savings refilling the SPR. Since refill-operations resumed in April of last year, we've added nearly 38 million barrels at prices from $60 to $70 a barrel, to replace barrels we sold three years ago for $95 a barrel.
Crude imports outpaced exports by nearly three million barrels a day. US crude imports are down slightly at 6.2 million barrels a day. The four-week average is down 13 percent from a year ago. Exports are down 15% from a week ago at just under 3.3 million barrels a day. The four-week average is down ten percent from last year.
Declining crude prices have made the Saudis, and their bankers, a little skittish about a $5 billion Saudi loan to Nigeria. Reuters reports the record oil-backed loan could shrink as a result. This would be Nigeria's largest oil-backed loan to date and Saudi Arabia's first participation of this scale in Nigeria. It would be backed by at least 100,000 barrels per day of oil. Nigeria is already using at least 300,000 barrels per day to repay previous loans.