By JOHN P. TRETBAR
Eagle Communications
After jumping two dollars a barrel on Friday, the benchmark Nymex crude futures contract dropped three dollars Monday. By lunchtime, U.S. crude dipped below $83 a barrel and London Brent dropped under $88.
Kansas diesel prices spiked last week, vaulting 42 cents a gallon in just seven days. Nationwide, diesel prices were four cents a gallon higher than a week earlier, but seven cents lower than a month ago, according to the auto club AAA.
In Kansas, the average pump price for diesel reached $4.70 a gallon last Thursday, an increase of 42 cents from a week earlier, the biggest one-week bump in recent memory, and twenty cents higher than the national average. Prices have since dropped to $4.62 as of Monday.
Weekly government reporting shows national diesel fuel inventories down 1.7 million barrels from a week ago. The Energy Information Administration says diesel stockpiles are about 12% below the five-year average for this time of year.
The Kansas Rig Count from Independent Oil & Gas Service was down two rigs in eastern Kansas, and down one in the western half of the state. That's a nearly eight percent drop from last week, down more than five percent from a month ago, and down over 39% from a year ago. Drilling was underway Monday on two leases in Ellis County and one in Barton County. Year to date, 207 operators have spudded 1,069 wells in Kansas, and drilled 2.9 million feet of well bore.
Operators across the state completed 21 wells in the week through October 26th. Out of 13 in western Kansas, six were dry holes. Kansas regulators okayed 37 permits for drilling at new locations, including one in Ellis County.
The government reported another all-time record for U.S. crude production. The Energy Information Administration says domestic operators pumped a best-ever 13,230,000 barrels per day last week. Before this year, output has exceeded 13 million barrels per day only twice. The U.S. has now topped 13 million barrels per day in each of the last three weekly reports.
The government says U.S. crude inventories are up 1.4 million barrels to just over 421 million as of October 20. Stockpiles are about five percent below the five-year average for this time of year. Energy Information Administration said average daily domestic crude imports rose by 71-thousand barrels to six million barrels per day. The four week average is up nearly two percent over the same four weeks last year.
Oil-by-rail traffic was down for the week but rose compared to last year. The Association of American Railroads reports 9,945 tanker carloads of petroleum or petroleum products rolling the rails in the week through October 21st. That's down more than six hundred tankers from a week earlier, but marks an 8.3 percent increase over the same week a year ago. Association of American Railroads reports the weekly totals have surpassed the year-ago tallies each week since July.
China is turning oil sanctions into a profit center. Just this year, China has reaped savings of nearly $10 billion through record purchases of oil from countries under western sanctions. That's according to Reuters reporting on trade and shipments from Russia, Iran and Venezuela. Cheaper crude bolsters the world's second-largest consumer and refiner, especially China's small independent operators. It also bolsters an already-lucrative export trade in diesel and gasoline.
In a sign of the times, the Chinese oil and gas firm PetroChina has reportedly settled a crude-oil transaction using the country's official digital currency. That's a first, according to the government newspaper China Daily, which reported a deal for a million barrels of crude sold at the Shanghai exchange was settled with China's Central Bank Digital Currency. Prices were not disclosed.