January 3, 2020

January 3, 2020

3rd January 2020

Oil Drilling Activity

Onshore US drilling activity decreased by 8 with a total active count of 773 (Y/Y decrease of 277) rigs; those targeting oil down 7, with the total at 670. Across the three major unconventional oil basins, the oilrig count decreased by 2, with Permian down 2, Williston and Eagle Ford flat.

Source: Baker Hughes Rig Count

US domestic crude production was unchanged last week; crude production stands at 12.9 million barrels per day, of which ~2.4 million barrels per day is offshore and Alaska production. Crude inventories decreased 11.5 million barrels, a significantly bigger-than-expected decline in stockpiles for oil.  

General Qassem Soleimani was killed in a US drone strike in Baghdad, the Pentagon confirmed. Soleimani, a major player in Middle East politics, led a Special Forces unit of Iran’s Revolutionary Guards. Soleimani’s killing will ratchet up already terrible US relations with Iran, in large part fueled by tough American sanctions on the country. A response by Iran to Soleimani’s death is seen as inevitable: what is unclear is if any action would hurl the country into a military conflict with the US and its allies that would harm global growth.

The 2020s are beginning on the heels of a decade that saw considerable demographic stagnation, highlighting important implications for immigration, congressional apportionment, and the country’s future.

The US population growth from 2018 to 2019 grew by a mere 0.48%, according to newly released Census Bureau estimates. This is the lowest annual growth rate since 1918, and caps off a decade that should show the slowest 10-year population growth since the first census taken in 1790.

Carbon, Gas and Oil commentary returns January 10

Weekly Recap

Drilling Activity

Total US rig count (including the Gulf of Mexico) stands at 796, a decrease of 9 from last week. The horizontal rig count stands at 701, down 2. US rig activity continues to show constraint and is 282 rigs below (-26%) last year’s total.

US Crude Oil Supply and Demand

Sources: EIA Weekly Update and GCA Analysis

Crude oil inventories decreased by 11.5 million barrels from the previous week. The crude stored at Cushing (the main price point for WTI) decreased 1.5 million barrels; total stored is 36.3 million barrels (~40% utilization). Total US commercial crude stored stands at 429.9 million barrels (~55% utilization).

US crude oil refinery inputs averaged 17.3 million barrels per day, with refineries at 94.5% of their operating capacity last week. This was 303,000 barrels per day more than last week’s average.

US gasoline demand over the past four weeks was at 9.1 million barrels, up 0.9% from a year ago. Total commercial petroleum inventories decreased by 2.9 million barrels last week.

US crude net imports averaged 1.9 million barrels per day last week, down by 1,522,000 barrels per day from the previous week. Over the past four weeks, crude oil net imports averaged 2.9 million barrels per day, 41.5% less than the same four-week period last year.

Authors

January 3, 2020

P. Kevin Galvin

Facilities/Cost Engineer - kevin.galvin@gaffney-cline.com

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