By JOHN P. TRETBAR
Kansas Common crude at McPherson’s CHS starts the week at $ 30 a barrel. That’s down $ 1.25 from a week ago, up $ 1 from the first of the month, but down $ 17 from a year ago. After posting their first weekly loss in three weeks, US crude futures prices plunged on Monday. In the afternoon, the benchmark Nymex contract was down $ 1.34 to $ 38.51 per barrel. London Brent fell $ 1.37 to $ 40.40.
Kansas drilling activity edged up last week. Independent Oil & Gas Service reports ten active drilling rigs in western Kansas, up two for the week. The tally east of Wichita was unchanged across five active platforms. Drilling is underway on two leases in Ellis County, where one-third has reached full depth and is being assessed. A Stafford County operator is preparing to dig two new wells there.
Baker Hughes reports 287 active drilling rigs across the country, an increase of six oil rigs. Texas added two platforms to the weekly tally, while Oklahoma added one.
Regulators approved 12 new drilling permits across Kansas last week, five of them east of Wichita and seven in western Kansas, including one in Barton County and two in Barton County. Stafford. That’s 358 permits to drill at new locations statewide so far this year, up from 876 at the same time last year.
Independent Oil & Gas Service reports one recently completed well in Ellis County among 13 completions in western Kansas last week. Add one east of Wichita for a total of 14 newly completed wells for the week, 694 so far this year.
The government said U.S. crude inventories fell by one million barrels last week to just over 488 million. The report was released less than a day after the American Petroleum Institute reported a surprise increase in inventories of more than half a million barrels.
US production fell below 10 million barrels per day for the first time in six weeks. The Energy Information Administration reported last week an average production of 9.86 million barrels per day, down 586,000 barrels per day from the previous week. Production is down nearly three million barrels per day from a year ago at this time.
The EIA said imports were down from 167,000 barrels per day last week to just over five million barrels per day. The four-week average is almost 14% lower than the same four-week period last year.
Oil traffic by rail increased slightly this week, but was still 19% below last year’s figures. The Association of American Railroads reports that 10,293 tank cars transporting petroleum or petroleum products during the week ending October 17. Oil by rail in Canada is down almost thirty percent from a year ago.
Falling demand for gasoline is driving down gasoline prices in most of the country. Across the United States, prices at the pumps were a penny cheaper last week than a week earlier, two cents lower than a month ago and almost half a dollar lower than the last year at this time. Triple-A said the national average Thursday was $ 2.16 a gallon, while the Sunflower State average was $ 1.93. Kansas was one of 13 US states with average prices under two dollars. It was selling for $ 1.99 in Great Bend and $ 1.90 at Hays. Filling your 15 gallon tank cost you nine dollars more than six months ago, but about five dollars less than last year at this time.
The two parties to the civil war in Libya appear to have completed their reconciliation. On Friday, they signed a permanent ceasefire, although skepticism is already mounting. The deal includes an order for all foreign mercenaries to leave the country, and places the state in political talks next month. Libya fell into chaos in 2011, after an uprising toppled and killed longtime dictator Muammar Gaddafi.
Renewed production amid weak demand has raised new concerns about crude oil storage capacity in the United States. The Energy Information Administration reports that nationwide totals are safe, but users have reached 77% of the capacity at the Cushing, Oklahoma storage facility. The EIA reports net stocks as a percentage of operational storage capacity. That figure peaked at 62% in June, but has since fallen to 54%. Cushing is fast approaching an all-time high. Oklahoma’s total hit 77% in the week that ended June 19.
ConocoPhillips has agreed to buy Concho Resources for around $ 9.7 billion in shares, marking the shale industry’s biggest deal since the collapse in energy demand earlier this year. Concho Resources was worth $ 32 billion just two years ago, but sells for $ 9.7 billion in shares. The deal will create what Bloomberg calls a heavy-duty driller in America’s most prolific oilfield, matched only by Occidental Petroleum and Chevron.
Native American tribes opposed to the Dakota Access Pipeline have once again called on a federal judge to stop the flow of oil while the legal battle over the line’s future unfolds. The tribes were successful on their first attempt, only for an appeals court to overturn the closure order earlier this year. The Bismarck Tribune reports that they are now asking the judge to clarify his order to satisfy the appeals court and to close the pipeline again. The court is awaiting a new environmental study to determine the risk the pipeline poses to tribal water supplies. The study is expected to last over a year.
Given pandemic lockdown restrictions around the world, global demand for crude oil is declining. You can’t even dock an oil tanker at some ports, where users are instead cutting back on stocks built up since March. Demand for crude tankers has fallen more than 14% this year according to Lloyd’s List Maritime Intelligence, which covers shipping news. According to Lloyd’s List, only around 80% of the international tanker fleet is currently in use.