Oil prices were down two percent or more in Monday trading.   U.S. crude was down to just over $50, after posting its strongest quarterly gain since the second quarter of 2016.  The international benchmark notched the biggest third-quarter increase, since 2004, about 20 percent, and traded as high as $59.49 last week. But by mid-morning Monday the Nymex benchmark crude futures contract was down $1.41 to $50.26/bbl.  London Brent lost $1.11 to $55.68

Diesel continues to be a key driver in global oil markets.  Bloomberg reports strong demand and refinery outages drained global diesel stocks over the summer, a rare occurrence as inventories usually build from July to September in preparation for a winter uptick in demand. European diesel benchmark prices surged more than 32% in three months, and the market is in backwardation, where near-month contracts are more expensive than those for later dates – a sign of market tightness.

The Kansas Geological Survey reported more 18 million barrels of oil produced in Kansas through June of this year.  At that rate, 2017 will see less production that 2016, which was the worst since 2007.  Ellis County led the way with 1.3 million barrels for the first six months of the year.  Then comes Haskell County with 1.18 million.  Barton County produced more than 852,000 barrels, followed by Finney County with 816,000.  Russell County production was over 805,000 barrels.  Stafford County reported 526,000 barrels of oil production for the first half of the year.

Top Ten Counties for Oil Production (through June 2017)

Ellis County 1.3M bbl

Haskell County 1.18M bbl

Barton County 852K bbl

Finney County 816K bbl

Russell County 805K bbl

Rooks County 798K bbl

Ness County 754K bbl

Harper County 544K bbl

Stafford County 526K bbl

Barber County 502K

(Source: KGS)

Baker Hughes reported 940 active drilling rigs across the US on Friday, an increase of five oil rigs and a decrease of one seeking natural gas.  Canada reported 213 active rigs, down seven.  Independent Oil & Gas Service reports ten active rigs in eastern Kansas, down one for the week, and 24 west of Wichita, up two. They’re reporting drilling ahead at two sites in Barton County, and they’re moving in completion tools at one lease in Ellis County and two in Stafford County.

Operators filed 22 permits for drilling at new locations last week, bringing the year-to-date total to 1,053.  There were nine new permits filed in eastern Kansas and 13 west of Wichita, including three in Ellis County and one in Russell County.

Independent Oil & Gas reports 33 new well completions over the last week, 952 so far this year.  There were eight completions reported east of Wichita and 25 in western Kansas, including one each in Barton, Ellis and Stafford counties.

The US Energy Information Administration says total US shale oil output in September is now expected to top six million barrels a day for the first time, compared to just one million barrels per day ten years ago.  Texas shale oilfields will exceed 4 million barrels a day.

Russia’s Federal Anti-monopoly Service is once again putting the brakes on Schlumberger’s bid to take control of Russia’s largest oil and gas driller, calling it “a risk to the country” amid deteriorating relations between Washington and Moscow.

 In July, Schlumberger, the world’s largest oil services company, agreed to buy 51 per cent of Eurasia Drilling Company.  It was their second attempt in two years to take control of the biggest exploration player in Russia’s sprawling oil and gas industry.  The Russian agency head warned that because of new sanctions, giving the company such a significant piece of the market would be “risky.”

Flint Hills residents are expanding efforts to protest oilfield wastewater disposal wells in their neighborhood, despite losing their effort to block such a well near Strong City last month.  One opponent tells the Kansas News Service the petitioners will not appeal the decision to allow the application for a disposal well by Quail Oil & Gas Company.  But she says they will organize to oppose each new application for saltwater disposal wells across several counties.

Oklahoma lawmakers resumed an earlier battle over tax revenue from cigarettes versus oil production.   House Speaker Charles McCall last week halted  special-session proceedings in the lower chamber until a budget agreement is reached.  The GOP’s cigarette tax bill won’t get support from Democrats without the unlikely Republican support of a tax increase on oil and gas production.   Neither tax proposal would fill Oklahoma’s $215 million budget shortfall.

Chevron Corp named a new chief executive and chairman, tapping the company’s longtime refining chief Mike Wirth.  He’ll succeed John Watson atop the world’s third-largest publicly-traded oil explorer. Watson is stepping down after more than seven years as CEO of the company.  During Watson’s tenure, Chevron investors more than doubled their money, compared to returns of less than 60 percent for its bigger international rivals.