Bears remain in control of market as crude inventories fell less than forecast and product inventories built. Gasoline is usually drawing down as we are in driving season. The IEA warns that the ongoing dispute between Middle East countries and Qatar is beginning to cause logistical issues for oil movements. IEA also reporting that it sees supply will outpace consumption into 2018.Â U.S. shale production continues to increase with reports now that Bakken showed its first growth in 17 months. Tensions with North Korea persist. Fed voted to raise rates again today, but could see more challenges for further increases later in the year depending on the progress of the economy. Values remain at the lower side of the trading range and may present buying opportunities.
The U.S. rotary rig count from Baker Hughes was up 11 at 927 for the week of June 9, 2017. It is 513 rigs (123.9%) higher than last year. Â The number of rotary rigs drilling for oil was up 8 at 741. There are 413 more rigs targeting oil than last year. Rigs drilling for oil represent 79.9 percent of all drilling activity. Â Rigs directed toward natural gas were up 3 at 185. The number of rigs drilling for gas is 100 higher than last year’s level of 85.
Year-over-year oil exploration in the U.S. is up 125.9 percent. Gas exploration is up 117.6 percent. The weekly average of crude oil spot prices is 6.8 percent lower than last year and natural gas spot prices are 26.6 percent higher than last year.
Refinery operating rates were up 0.3% this week at 94.4%.Â Imports were down for crude and products. Apparent demand for distillates was up, while gasoline was down this week.
Canadian rig activity was up 33 at 132 for the week of June 9, 2017 and is 67 (103.1%) than last year. Rigs targeting oil were up 23 at 74 and are 45 (155.2%) higher than last year. Gas directed rig count at 58 was up 10 and is 22 rigs 61.1%) higher than last year. Canadian drilling falls rapidly in the spring to avoid environmental damage moving drilling equipment during the spring thaw and rainy season. With large weather related seasonal swings, even year-over-year comparisons can lead to incorrect conclusions.