OUTLOOK The improving economic scene, both here in the U.S. as well as worldwide, is the main driver of the current oil rally that has seen the commodity settling around the $80 per barrel level. But high levels of product inventories (particularly gasoline), along with still higher supplies, will limit any sustained crude gains, in our view. But way too many factors weigh on oil prices, from OPEC decisions and geostrategic tensions to the value of the U.S. dollar and seasonal variables, to definitively size up each one of them for their respective impact on prices.  In its latest release, the Energy Information Administration (EIA) reported a less-than-anticipated increase in crude stockpiles, which rose by 800,000 barrels for the week ending October 23. However, current crude oil stocks, at 339.9 million barrels, still remain 9% above the year-earlier level as well as above the upper limit ...

  Last Thursday, we received a mildly bearish report from the federal government’s Energy Information Administration (EIA), showing a higher-than-expected rise in natural gas supplies. Stockpiles held in underground storage in the lower 48 states rose by 58 billion cubic feet (Bcf) for the week ended October 9. This takes the current storage level to a new all-time high of 3.72 trillion cubic feet (Tcf), which is up 13.8% from last year's level and 14.6% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 450 Bcf above last year’s level and 474 Bcf above the five-year average. The inventory addition was lower than the five-year-average injection of 64 Bcf and last year's build of 81 Bcf. The relentless increase in gas storage levels has meant that with three weeks remaining in the storage injection season, stockpiles ...

In its weekly release yesterday, the Energy Information Administration (EIA) reported a bigger-than-expected 69 billion cubic feet (Bcf) addition to natural gas stockpiles for the week ended October 2. This takes the current storage level to a new record high of 3.66 trillion cubic feet (Tcf), which is up 14.9% from last year's level and 15.1% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 473 Bcf above last year’s level and 480 Bcf above the five-year average. The inventory addition was lower than the five-year-average injection of 70 Bcf and last year's build of 87 Bcf.     The relentless increase in gas storage levels has meant that with four weeks remaining in the storage injection season, stockpiles are already 94% full. At this pace, by October 31, which is the end of the injection season, ...

Yesterday, one of the largest onshore contract drillers in the U.S., Patterson-UTI Energy Inc. (PTEN), declared its Sep 2009 drill rig count to average 81, up from 72 in the previous month. The company operated 77 rigs in the U.S. and 4 in Canada in September, compared to 69 rigs in the U.S. and 3 rigs in Canada during August.  Patterson’s activity levels in the U.S. peaked in early Oct 2008, with a rig count of 275. Since then, the company has been witnessing a steep and rapid decline on the back of decreased demand largely caused by lower commodity prices for natural gas.  Favorable prices over the last few years led to increased natural gas drilling, with the total onshore rig count scoring an all-time high in 2008. As a result, after remaining essentially flat for almost 9 years (1998−2006), natural gas production went up ...

Yesterday, we received a mildly positive report from the federal government’s Energy Information Administration (EIA), showing a less-than-expected rise in natural gas supplies. Stockpiles held in underground storage in the lower 48 states rose by 66 billion cubic feet (Bcf) for the week ended September 11. This takes the current storage level to 3.46 trillion cubic feet (Tcf), which is up 16.7% from last year's level and 16.4% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 496 Bcf above last year’s level and 487 Bcf above the five-year average. The inventory addition was lower than the five-year-average injection of 82 Bcf but slightly exceeded last year's build of 65 Bcf.     Overall, the relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. At this pace, ...

In its weekly release yesterday, the Energy Information Administration (EIA) reported a less-than-expected 69 billion cubic feet (Bcf) weekly addition to natural gas stockpiles for the week ended September 4. This takes the current storage level to 3.39 trillion cubic feet (Tcf), which is up 17.1% from last year's level and 17.4% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 495 Bcf above last year’s level and 503 Bcf above the five-year average.     The inventory addition was higher than last year's build of 63 Bcf and the five-year-average injection of 67 Bcf. The relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. At this pace, inventories are on course to surpass the all-time high level of 3.57 Tcf recorded at the end of October ...

Yesterday, one of the largest onshore contract drillers in the U.S., Patterson-UTI Energy, Inc. (PTEN) said its August 2009 drill rig count averaged 72, up from 65 in the previous month. The company operated 69 rigs in the U.S. and 3 in Canada in August, compared to 63 rigs in the U.S. and 2 rigs in Canada during July. Patterson’s activity levels in the U.S. peaked in early October 2008, with a rig count of 275. Since then, the company has witnessed a steep and quick decline on the back of decreased demand largely caused by lower commodity prices for natural gas. Favorable prices over the last few years led to increased natural gas drilling, with the total onshore rig count making a new all-time high in 2008. As a result, after remaining essentially flat for almost 9 years (1998-2006), natural gas production went up by ...

Yesterday, in its weekly release, the federal government’s Energy Information Administration (EIA) reported another rise in natural gas supplies. Stockpiles held in underground storage in the lower 48 states rose by 65 billion cubic feet (Bcf) for the week ended August 28. This takes the current storage level to 3.32 trillion cubic feet (Tcf), which is up 17.3% from last year's level and 17.8% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 489 Bcf above last year and 501 Bcf above the five-year average.     The inventory addition was smaller than last year's build of 92 Bcf but exceeded the five-year-average injection of 64 Bcf. The relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. At this pace, inventories are on course to surpass the ...

In its weekly release yesterday, the Energy Information Administration (EIA) reported a bigger-than-expected 54 billion cubic feet (Bcf) weekly addition to natural gas stockpiles for the week ended August 21. This takes the current storage level to 3.26 trillion cubic feet (Tcf), which is up 18.8% from last year's level and 18.1% above the five-year range (as clear from the nearby chart from the EIA). Current stocks are 516 Bcf above this last year and 500 Bcf above the five-year average.       The build was smaller than last year's 100 Bcf build and the five-year-average injection of 67 Bcf. However, the relentless increase in gas storage levels continue to add to the long list of issues weighing on the commodity. Natural gas prices rallied earlier last year, reaching over $13 per million Btu (MMBtu) in July 2008, before trending down. Prices have since dropped ...

Recently, Newfield Exploration Co. (NFX) – an independent energy firm – announced plans to cut back its third quarter natural gas production by about 2.5 billion cubic feet equivalent (Bcfe), on wells in the company's Mid-Continent division. The curtailments (roughly 4% of the company’s production guidance of 62.9–70.0 Bcfe) are in response to current low natural gas prices. Newfield, however, maintained its 2009 production guidance of 250–260 Bcfe, a 6% to 10% increase over 2008 production of approximately 236 Bcfe   In recent months, natural gas prices have remained weak as a result of recession-related reduction in demand and abundant U.S. production. Prices rallied earlier last year, reaching over $13 per million Btu (MMBtu) in July 2008, before trending down. They have since dropped sharply to the current level of $3.02 per MMBtu (Henry Hub spot price). Since most of Newfield’s reserves (roughly 70%) are tied up ...