By JOHN P. TRETBAR
Kansas Common crude at CHS in McPherson gained half a dollar on Friday and starts the week at $47 per barrel. That’s more than three dollars higher than the price at the beginning of the month.
The government said U.S. crude-oil inventories dropped 1.7 million barrels last week. At just over 433 million barrels, U.S. stockpiles remain at the five-year seasonal average.
The Energy Information Administration reported U.S. production was unchanged at its all-time record pace from last week, at 12.585 million barrels per day. A year ago at this time operators were pumping 10.87 million barrels per day.
The government reported a drop of 438,000 barrels per day in U.S. crude-oil imports last week to 5.9 million barrels per day. The four-week average is nearly 20% less than the same period a year ago.
Baker Hughes reported a big drop in its weekly rig count on Friday. There are 830 active rigs across the U.S., down 21 rigs. The count in Oklahoma was down six, while Texas was down five.
Independent Oil & Gas Service reports a small dip in the rig count in eastern Kansas. West of Wichita it’s unchanged with drilling underway on two leases in Stafford County, and drilling ahead at sites in Barton, Ellis and Stafford counties.
Regulators approve 28 permits for drilling at new locations, 21 in eastern Kansas and seven west of Wichita, including one new permit in Ellis County. So far this year there are 876 new drilling permits on file, compared to over 1,400 at this point last year.
Independent Oil & Gas Service reports 28 newly-completed wells for the week. There were 12 east of Wichita and 16 in Western Kansas, including a dry hole in Barton County and a producing well in Ellis County.
Amid a continuing decline in U.S. freight-train traffic, oil-by-rail continues to show growth. The American Association of Railroads reports 12,718 tanker cars shipped petroleum and petroleum products for the week ended October 19, an increase of 6.3% year-on-year. Total freight traffic last week was down 8.6 percent. Canada’s oil-by-rail traffic declined just over two percent. The cumulative totals so far this year are up more than 15% in the U.S., and up more than 20% in Canada.
Reuters is reporting on a scary prospect for the patch. The largest banking lenders to the U.S. oil and gas sector are marking down their expectations for oil and gas prices that underpin loans. Major banks including JPMorgan Chase, Wells Fargo, and Royal Bank of Canada have cut their estimated values for oil-and-gas companies’ reserves, which serve as the basis for those companies to receive what are called “reserve-based loans.”
Oil-price expectations are expected drop one to two dollars from similar estimates last spring. It’s estimated that there are a few hundred companies that take such loans, which total in the billions of dollars.