First half 1997 saw improved worldwide oil supplies, lower prices, and a relatively modest increase in demand for petroleum products in the U.S., reports the American Petroleum Institute.
Edward Murphy, API finance, accounting, and statistics director, said, "From the perspective of consumers, the situation is much improved over that of a year ago.
"Both domestically and internationally, supplies are increasing at a rate that has put downward pressure on prices.
"In the U.S., the increased consumption is being driven by rapid economic growth and is concentrated in those areas that are most directly tied to the state of the economy."
Supply outstripping demand
Murphy said after an 18-month period of tight supplies, the market shifted in late 1996 as increased supplies began to outstrip increases in demand.
"Worldwide petroleum consumption in the first 6 months of this year has grown by about 1.7 million b/d, compared with the first half of 1996, while world crude production increased by around 2.6 million b/d. The consequences of this have been manifest in two major ways: Prices fell dramatically, and inventories began to increase."
He said spot prices for West Texas intermediate crude peaked at more than $25/bbl in December and then slid to $19.23/bbl by June. Worldwide inventories usually drop 1 million b/d in the first quarter, but this year increased by 200,000 b/d.
U.S. data
API said petroleum products supplied to the U.S. market-a key measure of demand-were up 1.1% at 18,387,000 b/d in the first half, compared with the same period of 1996.
U.S. demand increased for gasoline, distillate (diesel fuel and home heating oil), jet fuel, and other oil products and dropped only for residual oil.
U.S. crude production was down 1.4% to 6,396,000 b/d, but natural gas liquids output was up 4.8% to 1,868,000 b/d. U.S. imports of crude and petroleum products during the first half were up 5.5% to 9,896,000 b/d.
Refinery activity surged during the period, setting a record in May and then surpassed that in June to almost 15.2 million b/d. Gasoline and diesel fuel production set records in June.
API said gasoline deliveries vs. a year ago were up 1.2% at 7,872,000 b/d for the first half and up 2.1% at 8,254,000 b/d for June.
Distillate deliveries rose 1.8% to 3,491,000 b/d for the half and in June were up 6.3% at 3,389,000 b/d.
Jet fuel deliveries rose 0.8% to 1,570,000 b/d for the half and 4.6% to 1,627,000 b/d in June.
Residual deliveries fell 3.8% to 841,000 b/d for the half but rose 2.9% to 756,000 b/d in June.
U.S. refinery utilization was 97.3% in June. Murphy said, "Refiners have been amazingly successful at enlarging capacity to produce light products."
Total stocks of crude and products were 1,001,700,000 bbl at the end of June, up 1% from the end of May and up 4.1% from a year ago.
Drilling data
API said estimated U.S. oil wells, gas wells, and dry holes completed in second quarter 1997 fell 5% from the same period in 1996.
In all, 4,994 oil and gas wells and dry holes were completed, 5% less than the 5,241 in the same period a year ago. This year, gas completions rose 3% to 2,090, oil completions fell 10% to 1,754, and dry holes dropped 10% to 1,150.
API said second quarter footage drilled dropped 4% to 29,094,000 ft from 30,169,000 ft in the same period last year.
Completions fell 1% to 10,228 in the first 6 months. Of those, oil wells dropped 8% to 3,514, gas wells rose 8% to 4,364, and dry holes slipped 3% to 2,350.
Exploratory well completions were 8% lower in the first 6 months, while development completions were about the same. Total footage increased 1% to 60,821,000 ft for the 6 months.
Copyright 1997 Oil & Gas Journal. All Rights Reserved.
