i imagine you all know what happened on Tuesday...while we can hardly garner exactly what energy and environmental policies a candidate might initiate based on his or her campaign speeches and tweets, we can certainly begin to get an idea where Mr Trump is going to take this country based on the moves he's already making in building his transition team....his initial move towards taking over came on Wednesday, even before all the votes were counted, when he appointed well known climate denier Myron Ebell, dubbed a 'climate criminal' by Greenpeace, to lead his EPA transition team...while it seems unlikely that that Trump would eliminate the EPA entirely, as he had promised he would during the campaign, Ebell's appointment certainly indicates an end to EPA regulation of CO2 and probably lax enforcement of the rest of our environmental laws...moreover, that initial move against the EPA probably means that he'll move to carry out his other anti-environment campaign pledges, such as scrapping the Clean Power plan and other environmental regulations that Obama put in place, eliminating all Federal incentives for renewable energy and clean power R&D, and pulling the US out of the Paris climate accords...while theoretically the earliest date that the US could legally withdraw from the Pairs accords would be 4 years after they came into force (ie, November. 4, 2020), lawyers have already suggested Trump could get around that by pulling out of the parent climate treaty, the 1992 U.N. Framework Convention on Climate Change, that was ratified by George Bush Sr, in one year, by simply giving the UN a notice to that effect...
we can also glean from his campaign speeches that he'll push a “drill-baby-drill” policy for oil & gas exploitation, which would included opening up all federal lands and waters to fracking, and that he'd cut Federal regulations that have slowed big oil projects from going forward...that would certainly include the Dakota Access Pipeline that he's personally invested in, which the Obama administration had held up in September, and which is now just 2 weeks away from drilling under the Missouri River...btw, the original plans for that project called for the pipeline to cross the Missouri River north of Bismarck, but that route was rejected as a threat to the water supply of the white people of Bismarck, and the route was instead moved to cross the river downstream, where it would only impact the Standing Rock Sioux tribe's water...Trump had also campaigned on reopening the Keystone XL pipeline route, and with his election we find that TransCanada is formulating plans to resubmit their proposal for that pipeline...it's hard to understand their thinking, since all the tar sands expansion projects that had been proposed early in the decade have since been cancelled because of low oil prices, and the takeaway needs for current tar sands production is already being met by existing pipelines...we also know that fracking interests will be well represented in the Trump administration, since fracking billionaire Harold Hamm has been his energy adviser throughout the campaign and is rumored as the next Energy Secretary...in addition, Politico reports that Trump is considering fracker Forrest Lucas of Lucas Oil as the next Secretary of the Interior...and if you think that's bad, it could even get worse, because someone from Trump's inner circle has leaked that Sarah Palin is in line for one of those cabinet positions too, while Newt Gingrich is being vetted for Secretary of State...
still, it's not the end of the world, although Trump's election may bring that end a little closer...we'd do well to remember that we've been here before, and survived...if you're old enough, you might remember that Jimmy Carter's National Energy Policy had once set the nation on a course to switch to renewable forms of energy and replace fossil fuel vehicles with electric, and that his green energy policy came to a complete halt after Ronald Reagan was elected and removed the 32 solar panels from the roof of the White House, which Carter had installed to provide the premises with heat and hot water...historically, most of our political leaders have been partially owned by the energy companies anyway, so if you’ve bought into the idea of American democracy, you have to live with it's fickle consequences...
still, no matter what Trump or his appointees do, they cannot force US oil and gas exploitation if it's unprofitable, and this week saw prices for both of those commodities again fall...initially, US oil prices were up 82 cents, or 1.86%, to $44.89 a barrel on Monday, after the FBI said it had not found new evidence to warrant charges against Hillary Clinton, and on renewed hope that OPEC would come to an agreement on production cuts...prices then rose to $44.98 a barrel on Tuesday after after the American Petroleum Institute reported a larger than expected crude supply increase, offset by larger than expect drawdowns of gasoline and distillates...oil prices then fell almost $2 from there in overnight trading as most markets were limit down as the election returns came in showing that Trump was winning, but recovered by the time the market opened on Wednesday and went on to increase to $45.27 a barrel, after the EIA reported smaller supply diversions from market expectations than were indicated by the API....prices then fell 61 cents, or 1.4%, to $44.66 a barrel on Thursday, after the IEA’s monthly report showed OPEC members pumped a record 33.83 million barrels a day in October, and then gathered pace on Friday to fall another 3% on that same news, ending the week down by $1.51, or 3.4 percent, at $43.14 per barrel...
natural gas prices also started out the week higher, rising to $2.816 per mmBTU on Monday before forecasts of mild weather drove prices down 18.3 cents, or 6.5%, to $2.633 permmBTU on Tuesday...and while they rebounded to $2.690 per mmBTU by the close on Wednesday, they fell right back to $2.632 per mmBTU on Thursday, after the EIA reported record inventories of natural gas in storage...prices then drifted lower from there on Friday to end the week at 2.619 per mmBTU, 5.3% lower than the previous week's close...
The Latest Oil Stats from the EIA
this week's release of oil data for the week ending November 4th by the US Energy Information Administration indicated that our crude oil production jumped by the most in 18 months, while our crude oil imports fell back to more normal levels, while refiners started to recover from their fall slowdown...for the week, the crude oil fudge factor that was needed to make the weekly U.S. Petroleum Balance Sheet (line 13) balance rose to +450,000 barrels per day, from last week's +395,000 barrels per day, which means that 450,000 more barrels of oil per day showed up in our final consumption and inventory figures this week than were accounted for by our crude production or import figures, meaning that one or several of this week's metrics were off by that amount...that's now the 3rd large positive adjustment in a row, and as a result the cumulative daily average of that adjustment has risen to 105,000 barrels per day, meaning the EIA's figures are also going off balance for the whole year, and should by rights be taken with a large grain of salt, if not completely ignored...but these figures are still what drives prices and hence oil field activity, so we'll just continue to track them as long as the market participants continue to believe them...
thus, for the week ending November 4th, the EIA reported that production of crude oil from US wells rose by 170,000 barrels per day to an average of 8,692,000 barrels per day, the 5th US oil production increase in a row and the largest production jump in 18 months...moreover, that happened as output from Alaskan fields rose by just 7,000 barrels per day, and production from the lower 48 states was 163,000 barrels per day higher, and that means our oil field production is now the highest it's been since June 10th of this year....however, that still left the week's domestic oil production 5.4% lower than the 9,185,000 barrels we produced during the week ending November 6th of last year, and 9.6% below the record 9,610,000 barrels per day of oil production that we saw during the week ending June 5th 2015...our oil production for the week ending November 4th was also 527,000 barrels per day, or 5.7% lower, than what we were producing at the beginning of this year, which we're citing as an interim benchmark, since our otherwise declining production had also been rising in the last few months of 2015...
at the same time, the EIA reported that our imports of crude oil fell by an average of 1,553,000 barrels per day to an average of 7,442,000 barrels per day during the week ending November 4th, down from last week's 4 year high of 8,995,000 barrels per day during...as a result, the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) slipped back to an average of 7.6 million barrels per day, 5.3% higher than the same four-week period last year...meanwhile, our exports of crude oil were again little changed, rising by an average of 6,000 barrels per day to an average of 410,000 barrels per day for the week, in data that is not directly comparable to last year's exports of 504,000 barrels per day for the same week, since the EIA has recently switched to reporting Custom's export data, rather than use estimates based on untimely export stats from the Census Bureau..
the EIA also reported that the amount of crude oil used by US refineries rose by an average of 369,000 barrels per day to an average of 15,817,000 barrels of crude per day during the week ending November 4th, as our refinery utilization rate rose to 87.1% during the week, up from last week's 85.2%, but down from the refinery utilization rate of 89.5% seen during the week ending November 6th last year...US oil refining is still down by 1,113,000 barrels per day, or by 6.6%, in the 9 weeks since Labor Day, as the refinery utilization rate has fallen from 93.7% over that stretch .. the crude oil refined this week nationally was also 0.8% below the 15,939,000 barrels of crude per day US refineries used during the week ending October 30th last year, but up 0.4% from the 15,752,000 barrels per day that were being refined during the equivalent week in 2014...
with the jump in the amount of crude oil being used by refineries, the EIA reported that refineries’ production of gasoline rose by 632,000 barrels per day to 10,456,000 barrels per day during the week ending November 4th, which appears to be a new record high for US gasoline output...if that number is to be believed (it's consistent across several EIA reports), it means our gasoline output was 7.9% higher that the gasoline output of 9,693,000 barrels per day during the week ending November 6th last year, and 11.9% higher than the gasoline production during the same week of 2014....at the same time, the EIA reported that refinery output of distillate fuels (diesel fuel and heat oil) rose by 122,000 barrels per day to 4,784,000 barrels per day during the week ending November 4th....however, the week's distillates output was still 1.8% lower than the 4,873,000 barrels per day that was being produced during the same week last year, and 0.8% lower than the 4,822,000 barrels per day of distillates we produced during the equivalent week of 2014...
however, even with that big jump our gasoline production, our gasoline supplies reportedly fell by 2,841,000 barrels to 220,963,000 barrels as of November 4th, as our domestic consumption of gasoline rose by 30,000 barrels per day to 9,213,000 barrels per day and as our gasoline imports rose by 42,000 barrels per day to 500,000 barrels per day....the reason those numbers don't add up* is because there was a large swing of 554,000 barrels per day in yet another fudge factor for gasoline, as shown in Table 2 on page 7 of the U.S. Petroleum Balance Sheet, which the footnote tells us is an "adjustment to correct for the imbalance created by the blending of fuel ethanol and motor gasoline blending components" ..be that as it may, November 4th's gasoline inventories were still 3.6% higher than the 213,245,000 barrels of gasoline that we had stored on November 6th of last year, and 8.5% higher than the 203,565,000 barrels of gasoline we had stored on November 7th of 2014....at the same time, our distillate fuel inventories fell by 1,948,000 barrels to 152,378,000 barrels by November 4th, the 7th consecutive large drop in our distillate supplies....however, even after the withdrawal of 16.4 million barrels of distillates from storage over the past 7 weeks, our distillate inventories were still 5.7% higher than the distillate inventories of 141,109,000 barrels of November 6th last year, and 27.2% above the distillate inventories of 116,850,000 barrels of November 7th, 2014
finally, even with the 1.5 million barrel per day drop in our oil imports, our inventories of crude oil still rose by 2,432,000 barrels to 485,010,000 barrels by November 4th, following last week's 14,420,000 barrel addition, the largest supply jump in history...however, with 2 hurricanes interfering with oil imports over the past 10 weeks, our oil stockpiles have still decreased by 10.23 million barrels, or 2.1% over that span, at a time of year when oil supplies are usually rising, and are 5.3% below their April 29th peak of 512,095,000 barrels...however, we still ended the week with 6.6% more crude oil in storage than the 454,822,000 barrels we had stored as of the same weekend a year earlier, and 40.1% more crude oil than the 346,150,000 barrels we had stored on November 7th of 2014...
This Week's Rig Count
US drilling activity slipped for the 1st time in 8 weeks during the week ending November 11th, as lower prices for both oil and natural gas over recent weeks seem to be taking their toll.....Baker Hughes reported that the total count of active rotary rigs running in the US fell by 1 rig to 568 rigs by this Friday, which was also down from the 767 rigs that were deployed as of the November 13th report last year, and down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014...
active oil rigs still rose by 2 rigs to 452 rigs this week, as oil drilling activity has only been down once in the past 20 weeks...oil drilling work is still down from the 574 oil directed rigs that were working a year ago, however, and down from the recent high of 1609 oil rigs that were drilling on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations decreased by 2 rigs to 115 rigs, which also left active gas rigs down from the 193 natural gas rigs that were in use a year ago, and down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, 2008...another rig that was shut down this week was classified as miscellaneous, which still left one miscellaneous rig active, up from a year ago, when no such miscellaneous rigs were active...
a single rig that had been drilling through an inland lake in Louisiana was among those shut down this week, which left only one such rig set up on inland waters, down from 3 a year ago...the number of horizontal drilling rigs that were deployed nationally also fell for the first time in 8 weeks, dropping by 2 rigs to 457 rigs this week, which was also down from the 587 horizontal rigs that were in use on November 6th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count rose by 1 rig to 59 rigs this week, which was still down from the 108 vertical rigs that were in use a year earlier... meanwhile, the directional rig count was unchanged at 52 rigs, which was down from the 72 directional rigs that were deployed during the same week last year...
the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes which shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of November 11th, the second column shows the change in the number of working rigs between last week (November 4th) and this week (November 11th), the third column shows last week's November 4th active rig count, the 4th column shows the change in the number of rigs running this Friday from the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that week a year ago, which in this case was for November 13th of 2015...
International Rig Count for October
Baker Hughes also released the international rig counts for October this week, which unlike the weekly North American count, is an average of the number of rigs that were running in each country during the month, rather than the total of those rig drilling at month end....Baker Hughes reported that an average of 1,620 rigs were drilling for oil and natural gas around the globe in October, which was up from the 1,584 rigs that were drilling around the globe in September, but down from the 2,086 rigs that were working globally in October of last year...increased North American drilling again accounted for the global increase, as the average US rig count rose from 509 rigs in September to 544 rigs in October, which was still down from the average of 791 rigs that were working in the US in October a year ago, while the average Canadian rig count rose from 141 rigs in September to 156 rigs in October, again still down from the 184 Canadian rigs that were deployed in October a year earlier....outside of Northern America, the International rig count fell by 14 rigs to 920 rigs in October, which was also down from 1,111 rigs a year ago, as an increase in drilling in the Middle East was more than offset by decreases elsewhere..
drilling activity in the Middle East rose for the 4th time in the past 10 months, as the countries included in this region added a net of 5 rigs, bringing their average up to 391 rigs for the month, which was still down from the 403 rigs deployed in the Middle East a year earlier....the largest regional drilling increase was again in Qatar, where their active rig count rose from 9 rigs in September to 12 in October, which was also up from the 6 rigs that Qatar had deployed in September a year ago...both Iraq and the Saudis added two rigs in October; that brought the Iraqi count up to 42 rigs, which was still down from last year's 50, and brought the Saudi's count up to 126 rigs, which was up from 125 rigs last October...the Saudi count has averaged near 125 rigs weekly since early 2015, which means they've increased drilling from their average of around 105 rigs in 2014...in addition to the Qataris, the Iraqis, and the Saudis, Abu Dhabi also added a rig in October; they now have 50 rigs deployed, up from 48 rigs a year ago..
meanwhile, the Latin American region saw its active rig count drop by a net of 6 rigs to 183 rigs, their first drop in 4 months, while they were also down from 294 rigs in October of 2015, as the region had idled 92 rigs over the first 6 months of 2016...the regional decrease came by way of shutting down 8 offshore platforms, as Latin American offshore activity fell from 38 rigs to 30 rigs, which was also down from 55 offshore last October...both Brazil and Mexico cut 4 rigs for the month, which left Brazil with 14 rigs, down from 36 rigs a year ago, and left Mexico with 21 active rigs, down from the 38 rigs they were running last October... at the same time, Venezuela shut down 3 rigs, leaving them with 48 still running, down from 71 rigs a year earlier...Argentina also idled a rig, leaving them with 69, down from 105 rigs last October...on the other hand, drillers in Columbia activated 5 additional rigs, as they had 11 rigs running in October, which was nonetheless still down from the 20 rigs thy had active a year earlier...in addition, Chile saw a rig added, bringing their count up to 3 rigs, up from 1 rig a year earlier...
at the same time, drilling activity in the Asia-Pacific region was reduced by 8 rigs to 182 rigs in October, with their offshore count reduced from 88 rigs to 84, which was down from the 213 rigs working the region a year earlier, which included 89 working offshore at that time....India shut down 3 rigs, leaving 112 still active nationwide, which was up from the 110 rigs they had deployed in October of last year...Indonesia idled the 2 rigs they had added in August and hence are back to running 17 rigs, down from the 23 rigs they had working a year earlier...Vietnam also idled 2 rigs, leaving 2 rigs still working, down from 3 rigs a year earlier...in addition, Australia, Myanmar, the Philippines and China offshore each saw a one rig drop...that left Australia with 3 rigs, down from 16 a year ago, left Myanmar with no activity, same as a year ago, left the Philippines with 1 rig, down from 2 last year, and left China with 28 platforms drilling offshore, same as they had last October...on the other hand, Malaysian drillers added 2 rigs; they now have 5 rigs deployed, still down from 7 a year ago, and 1 rig started drilling in Japan, which except for three months this summer, was their only drilling activity in 2 years...
meanwhile, the net rig count in Europe fell by 5 rigs to 87 rigs in October, which was down from the 108 rigs working in Europe a year ago at this time...however, that net drop masked an even larger pullback in the North Sea, as the European offshore count fell by 50%, dropping from 36 rigs in September to 24 offshore in October, which was also down from 43 offshore rigs a year ago...leading that pullback, Norwegian drillers shut down 7 platforms, leaving just 9 still working in October, which was also down from 15 working there a year earlier...the UK also shut down an offshore rig, leaving 7, which was down from the 14 platforms they had working offshore a year earlier...at the same time, Turkey added 2 rigs and thus had 31 rigs running, also up from 29 rigs a year ago...in addition, both Germany and the Netherlands added rigs in October; that meant 2 rigs active for the Germans, down from 3 a year earlier, and meant 4 rigs active for the Dutch, up from 3 rigs a year earlier...digging further into other files to resolve the offshore discrepancy, we find that Italy shut down their only offshore rig, while at the same time added one on land, leaving them unchanged at 3 rigs for the month, while "other Europe" shows an offshore reduction of 3 rigs, while 2 rigs were added on land...that ‘other’ category would include Sakhalin Island off the east coast of Russia, mysteriously included in the European count, where the overall rig count fell from 8 rigs to 7, which was also down from 8 rigs a year ago at the time..
lastly, the African continent saw no net change in its total activity in October, although at 77 rigs they were still down from the 93 rigs working in Africa last year at this time...Angola shut down 2 rigs, leaving 2 rigs still working, which was down from the 12 rigs that they had active a year earlier...in addition, both Morocco and Nigeria idled rigs; that left Morocco with none, same as a year earlier, and cut the Nigerian count to 4 rigs, down from 9 rigs a year earlier...at the same time, both the Congo Republic and Tunisia each started up 2 rigs, after both had none operating in September; for the Congo Republic, those 2 rigs were down from 3 rigs a year ago; while Tunisia also had no rigs in operation last October....finally, note that Iranian, Russian, and Chinese rig counts are not included in Baker Hughes international data, although you may have noted that China's offshore area, with an average of 28 rigs active in October, down from 29 in September, were included in the Asian totals here...
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