News from the Oil Patch: Pump prices drop below $3 in four states

Photo by Pixabay
Photo by Pixabay

Eagle Communications

Four states now boast average prices for regular gasoline below $3 per gallon. The cheapest pump prices are in Mississippi, followed by Oklahoma, Arkansas and Texas. The auto club AAA reports Kansas prices are down four cents to $3.04 per gallon, with some counties in northeastern Kansas below $3.

The near-month contract for light sweet crude in New York settled Friday at $75.53 per barrel, a weekly loss of more than a dollar and a half. Futures prices gained a dollar and change by midday Monday, with Nymex crude topping $76 and London Brent over $80 a barrel.

Kansas prices start the week at $65.75 per barrel, down two dollars from the first of the month but up nearly four dollars from the first of the year. Prices in McPherson in May dropped from $69.25 to $67.25 per barrel, for a monthly average of $68.81 per barrel.

The crude export group known as OPEC-Plus will extend its production cuts, but also set an end date, or at least the beginning of one. Some output cuts will stay, some will be phased out. But, prices dropped more than three percent, to four-month lows, on the announcement from a group with the stated goal of increasing prices. Eight OPEC-Plus members led by Saudi Arabia and Russia will pump up production by more than two million barrels per day beginning in October.

The Energy Secretary says Strategic Petroleum Reserve refills could start to happen faster. The U.S. could speed up current efforts to refill the Strategic Petroleum Reserve as maintenance on the stockpile is completed by the end of the year. That’s according to Energy Secretary Jennifer Granholm in an interview with Reuters. Granholm said she does not expect a big increase in oil and gas prices soon. The Energy Department this year has been buying about three million barrels of oil per month for the Strategic Petroleum Reserve after selling 180 million barrels in 2022 following Russia’s invasion of Ukraine.

The government added another 900,000 barrels to our strategic reserves last week bringing the total to 370.2 million barrels as of May 31. They’re paying less than $80 a barrel, after selling strategic barrels for over $95. That’s a paper profit over $5.5 billion.

The Energy Information Administration said commercial inventories increased by 1.2 million barrels to just under 456 million barrels. Stockpiles are about four percent below the five year average for this time of year.

Crude production in the United States held steady with some modest increases in Alaska raising last week’s total to 13,126,000 barrels per day.

Crude production in the United States rose to 408.6 million barrels in March. That’s 13,182,000 barrels per day, up 77,000 daily barrels from the month before. The Energy Information Administration reports production in Kansas averaged 74,000 barrels a day. That’s up one-and-a-half percent from February but down nearly four percent from a year ago.

EIA reports a big drop in quarterly averages, due largely to the weather downturn across the U.S. in January. First quarter production drops to 12.9 million barrels per day across the US, and 70-thousand barrels per day in Kansas.

Output continues to decline in Texas, the nation’s biggest oil producer. The latest preliminary numbers from the Railroad Commission show crude production of 120.7 million barrels in March, which is the lowest monthly tally since February of 2022. It’s more than a million barrels lower than February,  more than seven million barrels lower than January and more than 20-million barrels less than the all-time high in July of last year. The total for January through March is 370.6 million barrels, or 4.07 million per day.  The all-time best first-quarter production total in The Lone Star State was a year ago, when three-month production averaged over 4.4 million barrels a day.

U.S. crude oil imports averaged 7.1 million barrels per day last week, an increase of 289,000 barrels per day from the previous week.  Crude imports outpace exports by more than 2.5 million barrels a day. Four week average imports are up more than three percent from last year.

Hess Corp. shareholders approved the company’s buyout by Chevron for $53 billion. Just 51% of outstanding shares voted to accept the offer.

The Rotary Rig Count from Baker Hughes dropped by five horizontal rigs, down four oil rigs and two gas rigs to 594 nationwide. Oklahoma was down four from last week.

The Kansas Rig Count from Independent Oil & Gas Service is up seven percent, but still down 24% from a year ago, at 32 active rigs. There are 13 in eastern Kansas and 19 west of Wichita. Both tallies are up one for the week. Operators reached total depth this week on wells in Ellis, Russell and Stafford counties. They’re rigging up and preparing to spud on a lease in Stafford county.

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