November 4th tables and graphs

rig count summary:

November 3 2017 rig count summary

rig count vs oil price:

November 4 2017 rig count vs WTI price

oil exports:

November 1  2017 crude oil exports for Oct 27

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US oil & oil products exports at a record high, wiping out a decade of US oil production gains (and then some)

in lieu of a detailed review of how oil prices moved this week, i’ll just include a quick graph to show you how they moved…as you see below, US oil prices for December were up $2.33 a barrel, or about 4.3%, to a 6 month high of $53.90 a barrel…news that the Saudis and the Russians want to extend their production cuts fueled the increase…at the same time, North Sea Brent futures for December rose $3.07 a barrel, more than 5%, to $60.44 a barrel, a two year high…thus the international premium for light sweet crude oil remains more than 12% over that of similar US crude, continuing to underpin the drive by those with holdings of US oil to export it overseas…

October 28th 2017 oil prices

i want to start today with a few graphs that i intended to write about last week, but couldn’t because my internet service was down, and hence i was unable to access any of the supporting data…the point that i want to make with these graphs is very simple; the entire increase in oil output that has resulted since the advent of widespread fracking has gone overseas, whether directly or as a downstream product; all the gains, if there are any, have accrued to the exploitation companies, the refiners, and the shippers; not one drop of oil has been added to the supply of US consumers…

i’ll start by showing you the graph of recent US crude & product exports that made that clear to me…

October 18 2017 oil & oil products exports

the above graph was copied from the October 18th post at “Today in Energy”, the daily blog of the Energy Information Administration (EIA), which was titled “Crude oil and petroleum product exports reach record levels in the first half of 2017“…it shows our total crude and oil product exports in millions of barrels per day over the period from January 1st 2010 to June 30th of this year in a stacked graph, wherein monthly crude exports are shown in maroon, other liquids exports are shown in cerulean blue, propane exports are shown in navy, gasoline exports are shown in chocolate, distillate exports are shown in caramel and other refined products, which includes chemical feedstocks, are shown in sepia, with the top of the colored area for any given month thus showing the total of all oil and oil product exports for that month…the spreadsheet of the EIA”s monthly data shown on that chart is here, and the breakdown by type of product exported is here, which will be the sources of any amounts we’ll refer to subsequently…

what we can see from that chart is that at the beginning of 2010, before the advent of widespread fracking, our total crude and oil product exports were under 2 million barrels per day, and they have gradually increased over the period until the first half of this year, when they were averaging over 6 million barrels per day, with the high mark on the chart representing our 6,443,000 barrel per day of exports in February…

next, we’ll look at a graph which will illustrate the change in our crude oil output over the same period….

October 27 2017 US oil production as of Oct 20

the above graph is from the webpage of the EIA spreadsheet of our weekly crude oil production totals, and it shows the oil output from US wells, in thousands of barrels per day, from late 1999 until October 20th of this year…comparing our monthly crude production to the same periods we cited above for our gross exports, we find that our crude oil production was averaging around 5.4 million barrels per day at the beginning of 2010, and that it had grown to an average of over 9.4 million barrels per day by mid 2015, before falling back due to lower prices, only to recover to just below those levels in recent months (ignoring the weeks when production was shut in due to hurricanes, which we’ll consider to be an aberration for this exercise…

so, what we find when we compare the data shown by these two graphs is that our total exports of crude and oil products increased by over 4 million barrels per day in the first seven and a half years of this decade, while the production of oil from US has increased by almost the same amount over that same span….that means that the entirety of the increase that has accrued to US oil production during this period of widespread fracking, has, on a barrels of oil or products basis, ending up on ships or pipelines heading out of this country…understand we’re not saying that all fracked oil is exported, as some of our oil exports no doubt comes from conventional wells, while some of our refined products exports were refined from oil first imported from overseas, but that on a net basis, the increase in oil from fracking has matched, barrel for barrel, by an increase in our exports of oil and oil products…

furthermore, notice that the first chart we included above only included export data up until the end of June…in recent months, however, the balance has shifted further towards exports, and we are now exporting much more crude oil and refined products than our increased production can account for, which we’ll also show by way of a few graphs…we’ll start with a graph of our weekly crude oil exports over the past year….

October 26 2017 crude oil exports for Oct 20

the above graph comes from a weekly emailed package of oil graphs distributed by John Kemp, senior energy analyst and columnist with Reuters…it shows weekly US crude oil exports in thousands of barrels per day over the past 13 months, and also gives us the exact amount of our crude exports in thousands of barrels per day over the past 8 weeks…what we can see from this graph is that our weekly crude oil exports were quite volatile over the first half of this year, generally over 500,000 barrels per day, but occasionally jumping to as high as 1,200,000 or 1,300,000 barrels per day…the average of our crude oil exports for the first six months of this year was 918,000 barrels per day….however, since US crude has been selling at a 10% to 12% discount to the international price of oil, our exports have jumped to an average of 1,693,000 barrels per day over the past 5 weeks, a pace we believe will continue for the foreseeable future, since contract prices for US oil several months out are similarly discounted…

next, we have a graph which shows those crude oil exports combined with oil products exports over the past year, which serves to update the picture shown in the initial EIA graph, which only covers the year to June…

October 26 2017 crude and products exports for Oct 20

the above graph, from a Zero Hedge post on this week’s EIA report, shows weekly gasoline exports from the US in black, weekly distillates exports from the US in blue, and the weekly total of all crude oil and oil products exports in green over the past year, up until the week ending October 20th…it should be immediately clear that as of the most recent week, our total oil & products exports hit a new record of 7,663,000 barrels per day, beating the previous record of 7,023,000 barrels set three weeks earlier by more than 9%…during the same week, our exports of distillates were at 1,576,000 barrels per day, just short of the distillates export record of 1,612,000 barrels per day set just two weeks earlier…and while our gasoline exports weren’t a record, the 906,000 barrels of gasoline we exported per day was the most gasoline we’ve exported since the week ending January 13th…

returning to the comparison we made with the initial two graphs in this series, oil production from US wells during the week ending October 20th was at 9,507,000 barrels per day, or about 4.1 million barrels per day more than our January 2010 baseline…our record gross exports of 7,663,000 barrels per day, on the other hand, were about 5.7 million barrels per day higher than January 2010 gross exports….so although this is only one week’s data, and likely an outlier, our gross exports of oil and products over time are now rising much faster than our field production of oil, the so-called fracking boom notwithstanding…that’s a pace which is clearly unsustainable, but seems destined to continue until such time as US prices rise to those of the rest of the world, which may take a severe domestic shortage to achieve….

The Latest US Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, covering details for the week ending October 20th, showed large increases in both our oil imports and our domestic production of oil, enough so that a small amount of surplus oil could be returned to storage, despite a large increase in the amount of oil used by US refineries at the same time….our imports of crude oil rose by an average of 640,000 barrels per day to an average of 8,123,000 barrels per day during the week, while our exports of crude oil rose by 126,000 barrels per day to a near record 1,924,000 barrels per day, which meant that our effective imports netted out to an average of 6,199,000 barrels per day during the week, 514,000 barrels per day more than during the prior week…at the same time, field production of crude oil from US wells rose by 1,101,000 barrels per day to an average of 9,507,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 15,706,000 barrels per day during the reported week… 

at the same time, US oil refineries were using 16,025,000 barrels of crude per day, 586,000 barrels per day more than they used during the prior week, while during the same period 77,000 barrels of oil per day were being added to oil storage facilities in the US….hence, this week’s crude oil figures from the EIA seem to indicate that our total supply of oil from net imports and from oilfield production was 396,000 fewer barrels per day than what refineries reported they used plus what was added to storage during the week…to account for that discrepancy, the EIA needed to insert a (+396,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as “unaccounted for crude oil”…

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,609,000 barrels per day, 3.2% above the imports of the same four-week period last year….the total 77,000 barrel per day addition to our total crude inventories came about on a 122,000 barrel per day addition to our commercial stocks of crude oil, which was partially offset by a 45,000 barrel per day emergency withdrawal of oil from our Strategic Petroleum Reserve, which apparently is still being tapped to address short term spot shortages caused by this year’s hurricanes…this week’s 1,101,000 barrel per day increase in our crude oil production was due to a 1,109,000 barrel per day surge in output from wells in the lower 48 states, as production came back after Hurricane Nate, while output from Alaska fell by 8,000 barrels per day at the same time…the 9,507,000 barrels of crude per day that were produced by US wells during the week ending October 20th was 8.4% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.8% more than the 8,504,000 barrels per day of oil we produced during the during the equivalent week a year ago, while it was still 1.1% below the record US oil production of 9,610,000 barrels per day set during the week ending June 5th 2015…  

US oil refineries were operating at 87.8% of their capacity in using those 16,025,000 barrels of crude per day, up from 84.5% of capacity the prior week, a fairly normal pace for a fall seasonal maintenance period…the 16,025,000 barrels of oil that were refined this week were 9.6% less than the 17,725,000 barrels per day that were being refined the week before Hurricane Harvey struck at the end of August, but were still 3.0% more than the 15,552,000 barrels of crude per day that were being processed during week ending October 21st, 2016, when refineries were operating at 85.5% of capacity…

despite the pickup in US oil refining, gasoline output from our refineries was lower, decreasing by 95,000 barrels per day to 9,936,000 barrels per day during the week ending October 20th, which was still 1.0% higher than the 9,837,000 barrels of gasoline that were being produced daily during the comparable week a year ago….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) rose by 11,000 barrels per day to 4,795,000 barrels per day, which was 5.7% more than the 4,536,000 barrels per day of distillates that were being produced during the week ending October 21st last year….   

with the decrease in our gasoline production, our end of the week gasoline inventories fell by 5,456,000 barrels to 216,869,000 barrels by October 20th, the first drop in gasoline inventories in 5 weeks…the size of the decrease was exacerbated by a 270,000 barrel per day increase to 906,000 barrels per day in our exports of gasoline, while our imports of gasoline fell by 457,000 barrels per day to 233,000 barrels per day, the least gasoline we’ve imported since November 5 1995…also contributing to the decrease in our supplies, our domestic consumption of gasoline rose by 178,000 barrels per day to 9,314,000 barrels per day at the same time…with significant gasoline supply withdrawals in 13 out of the last 19 weeks, our gasoline inventories are now down by 10.5% from June 9th’s level of 242,444,000 barrels, and 4.0% below last October 14th’s level of 226,011,000 barrels, even as they are still roughly 4.8% above the 10 year average of gasoline supplies for this time of the year…   

with our distillates production little changed, our supplies of distillate fuels fell by 5,246,000 barrels to 129,241,000 barrels over the week ending October 20th, the seventh decrease in eight weeks…that large drop in our supplies was because the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 624,000 barrels per day to 4,101,000 barrels per day, and because our exports of distillates rose by 237,000 barrels per day to a near record 1,576,000 barrels per day, while our imports of distillates rose by 26,000 barrels per day to 133,000 barrels per day…after this week’s large increase, our distillate inventories ended the week 15.2% lower than the 152,378,000 barrels that we had stored on October 21st, 2016, and 7.2% lower than the 10 year average for distillates stocks for this time of the year…if the forecast La Nina materializes, we will see a shortage of heat oil this winter…

finally, with the big rebound in our oil production and the large increase in our oil imports, our commercial crude oil inventories rose for just the 5th time in the past 29 weeks, increasing by 856,000 barrels, from 456,485,000 barrels on October 13th to 457,341,000 barrels on October 20th…while our oil inventories as of October 20th were still 2.3% below the 468,158,000 barrels of oil we had stored on October 21st of 2016, they were 2.1% higher than the 447,994,000 barrels in of oil that were in storage on October 23rd of 2015, and 31.2% greater than the 348,475,000 barrels of oil we had in storage on October 24th of 2014…

This Week’s Rig Count

US drilling activity decreased for the 4th week in a row and for 10th time in the past 13 weeks during the week ending October 27th, with this week’s cutbacks entirely in rigs targeting natural gas…Baker Hughes reported that the total count of active rotary rigs running in the US fell by 4 rigs to 909 rigs in the week ending on Friday, which was still 352 more rigs than the 557 rigs that were deployed as of the October 28th report in 2016, while it was less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014….

the number of rigs drilling for oil increased by 1 rig to 737 rigs this week, only their 2nd increase in 12 weeks, which meant active oil rigs were up by 296 over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the count of drilling rigs targeting natural gas formations decreased by 5 rigs to 172 rigs this week, which was the smallest natural gas rig deployment since May 12th and just 58 more gas rigs than the 114 natural gas rigs that were drilling a year ago, and way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008…

the count of rigs drilling offshore was unchanged at 20 rigs this week, as 20 platforms remained active in the Gulf of Mexico, down from the 21 in the Gulf and one offshore from Alaska a year ago…however, one of the working Gulf rigs was moved from offshore Louisiana to offshore of Texas, where there are now 2 rigs drilling, up from one rig offshore from Texas a year earlier…. 

the count of active horizontal drilling rigs was down by 2 rigs to 769 rigs this week, which was the smallest number of horizontal rigs active since May 26th…however, that was still up by 319 rigs from the 450 horizontal rigs that were in use in the US on October 28th of last year, while down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014….at the same time, the directional rig count was down by 6 rigs to 74 rigs this week, which was still up from the 54 directional rigs that were deployed during the same week last year…..on the other hand, the vertical rig count was up by 4 rigs to 66 vertical rigs this week, which was also up from the 53 vertical rigs that were working on October 28th of 2016……

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of October 20th, the second column shows the change in the number of working rigs between last week’s count (October 13th) and this week’s (October 20th) count, the third column shows last week’s October 13th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 21st of October, 2016…        

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of October 27th, the second column shows the change in the number of working rigs between last week’s count (October 20th) and this week’s (October 27th) count, the third column shows last week’s October 20th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 28th of October, 2016…        

October 27 2017 rig count summary

other than the changes inidcated for the major producing states shown in the first table above, a rig also started drilling in Nebraska this week, which was the first drilling seen in that state since early July of last year…

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3rd quarter GDP, September’s durable goods and new home sales

the key economic release of the past week was the 1st estimate of 3rd quarter GDP from the Bureau of Economic Analysis; other widely watched releases included the advance report on durable goods for September and the September report on new home sales, both from the Census bureau…we also saw the release of the Chicago Fed National Activity Index (CFNAI) for September, a weighted composite index of 85 different economic metrics, which rose to +0.17 in September from –0.37 in August, which was revised from the -0.31 reported last month….that left the 3 month average of the index unchanged at -0.16 in September, which indicates that national economic activity has been somewhat below the historical trend over the summer months…

   in addition, this week also saw the release of two more regional Fed manufacturing surveys for October: the Richmond Fed Survey of Manufacturing Activity, covering an area that includes Virginia, Maryland, the Carolinas, the District of Columbia and West Virginia, reported its broadest composite index fell to +14 in October from +19 in September, still suggesting ongoing growth in that region’s manufacturing, and the Kansas City Fed manufacturing survey for October, covering western Missouri, Colorado, Kansas, Nebraska, Oklahoma, Wyoming and northern New Mexico, which reported its broadest composite index rose to 23 in October, up from 17 in September and 16 in August, and their strongest expansionary reading since March 2011…

3rd Quarter Growth at 3.0% Rate on Inventory Build, Improving Trade Balance

our economy grew at a 3.0% rate in the 3rd quarter,  just a bit lower than the growth rate of the second quarter, as growth in private inventories offset slower personal consumption growth…the Advance Estimate of 3rd Quarter GDP from the Bureau of Economic Analysis estimated that the real output of goods and services produced in the US grew at a 3.0% annual rate over the output of the 2nd quarter of 2016, when our real output grew at a 3.1% real rate…in current dollars, our third quarter GDP grew at a 5.2% annual rate, increasing from what would work out to be a $19,250.0 billion a year output rate in the 2nd quarter to a $19,495.5 billion annual rate in the 3rd quarter, with the headline 3.0% annualized rate of increase in real output arrived at after an annualized inflation adjustment averaging 2.2%, aka the GDP deflator, was applied to the current dollar change… as is usual with an advance estimate, the BEA cautions that the source data is incomplete and also subject to revisions, which have averaged +/-0.7% in either direction for nominal GDP, and +/- 0.6% for real (inflation adjusted) GDP before the third estimate for the quarter is released, which will be two months from now…also note that September construction and preliminary inventory data have yet to be reported, and that the BEA assumed a 1.1% increase in residential construction, an 0.3% decrease in nonresidential construction, and an increase in nondurable manufacturing inventories for September before they estimated 3rd quarter output (see Key source data and assumptions (xls)

while we cover the details on the 3rd quarter below, remember that the press release for GDP reports all quarter over quarter percentage changes at an annual rate, which means that they’re expressed as a change a bit over 4 times of that what actually occurred over the 3 month period, and that the prefix “real” is used to indicate that each change has been adjusted for inflation using price changes chained from 2009, and then that all percentage changes in this report are calculated from those 2009 dollar figures, which would be better thought of as a quantity indexes than as any reality based dollar amounts….for our purposes, all the data that we’ll use in reporting the changes here comes directly from the pdf for the 1st estimate of 3rd quarter GDP, which is linked to on the sidebar of the BEA’s press release, which also offer links to just the tables on Excel and other technical notes…specifically, we refer to table 1, which shows the real percentage change in each of the GDP components annually and quarterly since the 4th quarter of 2013, table 2, which shows the contribution of each of the components to the GDP growth figures for those quarters and years, table 3, which shows both the current dollar value and inflation adjusted value of each of the GDP components, table 4, which shows the change in the price indexes for each of the components, and table 5, which shows the quantity indexes for each of the GDP components, which are used to convert current dollar figures into units of output represented by chained dollar amounts…

personal consumption expenditures (PCE), which accounts for roughly 69% of GDP, grew at a 3.9% rate in current dollars in the 3rd quarter, which turned out to be a 2.4% real growth rate of consumed goods and services after the 3rd quarter PCE price index increase of 1.5% at an annual rate was used to adjust that spending for inflation….consumer outlays for durable goods rose at a 5.7% rate while average prices of those durable goods fell at a 2.6% rate, and thus the BEA found real growth in output of consumer durables rose at a 8.3% rate, as consumption of automobiles grew at a 14.7% rate and accounted for half the increase…the BEA also found that real output of consumer non-durable goods rose at a 2.1% rate, after growth in consumer spending for non-durables at a 4.5% rate was adjusted for prices that rose at a 2.4% rate, as growth in real consumption of food and other non-durables more than offset lower growth in consumption of gasoline and clothing…meanwhile, the 3.4% nominal growth in consumer outlays for services was deflated by a 1.9% increase in prices for personal services to show real output of consumer services grew at a 1.5% annual rate, as weakness in the real growth rate for outlays for housing and utilities was more than offset by modest growth in all other services…as a result of these changes in growth from the 2nd to the 3rd quarter, the increase in outlays for durable goods added 0.61 percentage points to the GDP growth rate, increased consumption of non-durable goods added 0.31 percentage points, and increased consumption of services added 0.70 percentage points to the growth rate of GDP in the 3rd quarter…

the change in other components of the change in GDP are computed by the BEA in the same manner as we have just illustrated for computing PCE; ie, the annualized increase in current dollar spending for the quarter is adjusted with the annualized inflation factor for that component, yielding the change in real units of goods or services produced in the quarter at an annual rate….thus, real gross private domestic investment, which had grown at a 3.9% annual rate in the 2nd quarter, grew at a 6.0% annual rate from those levels in the 3rd quarter, mostly on increased inventory accumulation…real growth in fixed investments grew at a 1.5% annual rate in the 3rd quarter, after growing at a 3.2% rate in the 2nd quarter…among fixed investments, real non-residential fixed investment grew at a 3.9% rate, even as real investment in non-residential structures shrunk at a 5.4% rate and subtracted 0.15 percentage points from 3rd quarter GDP, because real investment in equipment grew at a 8.6% rate and added 0.47 percentage points to GDP while real investment in intellectual property grew at 4.3% rate and added 0.17 percentage points to GDP….meanwhile, real residential investment shrunk at a 6.0% rate in the 3rd quarter, after shrinking at a 7.3% rate in the 2nd quarter, and subtracted 0.24 percentage points from 3rd quarter GDP…for an easy to read table as to what’s included in each of those GDP investment categories, see the NIPA Handbook, Chapter 6, page 3

meanwhile, real private inventories grew by an inflation adjusted $35.8 billion in the quarter, up from the inflation adjusted inventory growth at a $5.5 billion rate we saw in the 2nd quarter, and as a result the $30.3 billion increase in real inventory growth added 0.73 percentage points to the 3rd quarter’s growth rate, after modest real inventory growth at a $4.3 billion rate in the 2nd quarter had added 0.12% to that quarter’s GDP growth….however, since greater growth in inventories indicates that more of the goods produced during the quarter were left in storage or “sitting on the shelf”, their increase by $30.3 billion in turn means real final sales of GDP were actually smaller by that amount, and hence real final sales of GDP only rose at a 2.3% rate in the 3rd quarter, down from the real final sales growth rate of 2.9% in the 2nd quarter, when the smaller increase in inventory growth meant that growth in real final sales was fairly close to real growth in GDP…

real exports increased in the 3rd quarter while real imports decreased, thus increasing the portion of our investment and consumption that was domestically sourced…our real exports of goods and services grew at a 2.3% rate in the third quarter, after our exports had increased at a 3.5% rate in the 2nd quarter, while our real imports shrunk at a 0.8% rate in the 3rd quarter after growing at a 1.5% rate in the 2nd quarter…as you’ll recall, increases in exports are added to GDP because they are part of our production that was not consumed or added to investment in our country (& hence not counted elsewhere in this GDP calculation), while increases in imports subtract from GDP because they represent either consumption or investment that was added to another GDP component that shouldn’t have been because it was not produced here….thus the 3rd quarter increase in real exports added 0.28 percentage points to 3rd quarter GDP, while lower 3rd quarter imports added 0.12 percentage points to 3rd quarter GDP, and hence our improving trade balance added a net of 0.41 (rounded) percentage points to 3rd quarter GDP, after our improved trade deficit had added 0.21 percentage points in the second quarter…

finally, real consumption and investment by government decreased at a 0.1% annual rate in the 3rd quarter, after shrinking at a 0.2% rate in the 2nd quarter, as federal government consumption and investment rose at a 1.1% rate, while state and local consumption and investment contracted at a 0.9% rate….inflation adjusted federal spending for defense grew at a 2.3% rate and added 0.09 percentage points to 3rd quarter GDP growth, while real non-defense federal consumption and investment shrunk at a 0.5% rate and subtracted 0.01 percentage points from GDP….note that federal government outlays for social insurance are not included in this GDP component; rather, they are included within personal consumption expenditures only when such funds are spent on goods or services, indicating an increase in the output of goods or services….meanwhile, state and local government investment and consumption expenditures fell at a 0.9% annual rate and subtracted 0.09 percentage points from the growth of 3rd quarter GDP, as real growth in state and local consumption expenditures added 0.08 percentage points while real growth in state and local investment shrunk at a 9.5% rate and subtracted 0.17 percentage points…

September Durable Goods: New Orders Up 2.2%, Shipments Up 1.0%, Inventories Up 0.6%

the Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders for September (pdf) from the Census Bureau reported that the value of the widely watched new orders for manufactured durable goods rose by $5.1 billion or 2.2 percent to $238.7 billion in September, after August’s new orders were revised from the $232.8 billion reported last month to $233.6 billion, now 2.0% greater than July’s orders, which had originally been reported as a 1.7% increase…year to date new orders are now 5.2% above those of 2016, vs the 5.0% year to date change we saw in this report last month….the volatile monthly change in new orders for transportation equipment led the September increase, as new transportation equipment orders rose $4.0 billion or 5.1 percent to $81.2 billion, on a 31.5% increase to $12,752 million in new orders for commercial aircraft….excluding orders for transportation equipment, new orders still rose 0.7%, and excluding just new orders for defense equipment, new orders increased 2.0%….meanwhile, new orders for nondefense capital goods less aircraft, a proxy for equipment investment, rose $852 million or 1.3 percent to $65,935 million…

meanwhile, the seasonally adjusted value of September shipments of durable goods, which were included as inputs into various components of 3rd quarter GDP after adjusting for changes in prices, increased by $2.4 billion or 1.0 percent to $240.5, after August shipments were revised from from $237.2 billion to $238.14 billion, now up 0.7% from July….a $1.1 billion or 1.4 percent increase to $79.7 billion in shipments of transportation equipment led the increase, without which all other shipments rose 0.8%…at the same time, the value of seasonally adjusted inventories of durable goods, also a major GDP contributor, rose for the 14th time in 15 months, increasing by $2.4 billion or 0.6 percent to $403.6 billion, after August inventories were revised from $$400.5 billion to $401,176 million, now 0.5% higher than the prior month…an increase in inventories of transportation equipment were also a factor in the September inventory increase, as they rose $0.8 billion or 0.7 percent to $130.8 billion…

finally, unfilled orders for manufactured durable goods, which are probably a better measure of industry conditions than the widely watched but volatile new orders, were up for the first time in 3 months, rising by $2.8 billion or 0.2 percent to $1,135.1 billion, after the small August decrease was revised from $1,132.3 billion to $1,132.6 billion, now statistically unchanged…a $1.5 billion or 0.2 percent to $772.1 billion increase in unfilled orders for transportation equipment was responsible half the increase, as unfilled orders excluding transportation equipment orders rose 0.3% to $362,958 million….compared to a year earlier, the unfilled order book for durable goods is now 1.4% above the level of last September, with unfilled orders for transportation equipment just 0.1% above their year ago level, largely due to a 0.6% decrease in the backlog of orders for commercial aircraft…  

New Home Sales Reported Much Higher on Buying in the South

the Census report on New Residential Sales for September (pdf) estimated that new single family homes were selling at a seasonally adjusted pace of 677,000 annually, which was 18.9 percent (±19.0 percent)* above the revised annual pace of 561,000 that new single family homes were selling at in August and 17.0 percent (±22.4 percent)* above the estimated annual rate that new homes were selling at in September of last year….the asterisks indicate that based on their small sampling, Census could not be certain whether September new home sales rose or fell from those of August, or even from those of a year ago, with the figures in parenthesis representing the 90% confidence range for reported data in this report, which has the largest margin of error and is subject to the largest revisions of any census construction series….with this report; sales of new single family homes in August were revised from the annual rate of 580,000 reported last month to a 561,000 a year rate, while home sales in July, initially reported at an annual rate of 571,000 and revised to a 580,000 a year rate last month, were revised to a 582,000 a year rate with this report, and while June’s annualized home sale rate, initially reported at an annual rate of 610,000 and revised from the first revision at a 630,000 a year rate to a 614,000 a year rate last month, were revised up to a 619,000 a year rate with this release…

the annual rates of sales reported here are seasonally adjusted after extrapolation from the estimates of canvassing Census field reps, which indicated that approximately 52,000 new single family homes sold in September, up from the estimated 45,000 new homes that sold in August and the estimated 50,000 that sold in July…most of the September increase was in the South, where new home sales increased from 25,000 in August to 31,000 in September…

the raw numbers from Census field agents further estimated that the median sales price of new houses sold in September was $319,700, up from the median sale price of $303,800 in August and up from the median sales price of $314,800 in September a year ago, while the average September new home sales price was $385,200, up from the $364,300 average sales price in August, and up from the average sales price of $366,100 in September a year ago….a seasonally adjusted estimate of 279,000 new single family houses remained for sale at the end of September, which represents a 5.0 month supply of homes at the September sales rate, down from the reported 6.1 months supply of new homes available in August…for graphs and additional commentary on this report, see the following two posts by Bill McBride at Calculated Risk: New Home Sales increase to 667,000 Annual Rate in September and  A few Comments on September New Home Sales

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…) 

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graphics for October 28

oil prices:

October 28th 2017 oil prices

rig count summary:

October 27 2017 rig count summary

crude oil output:

October 27 2017 US oil production as of Oct 20

crude oil exports:

October 26 2017 crude oil exports for Oct 20

total exports:

October 26 2017 crude and products exports for Oct 20

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US oil production falls to lowest in 42 months, rig count drops most in 20 months

US oil prices were up 4 days out of 5 again this week, but still only ended 2 cents higher, while Brent, the widely quoted international oil price, was also up 4 out of 5 days and ended 58 cents higher, and hence the premium that’s been driving record US oil exports widened…the contract for US oil for November delivery first rose 42 cents to $51.87 a barrel on Monday, as US trained and armed Iraqi forces moved on the key oil-producing city of Kirkuk, which had been occupied by US trained and armed Kurdish forces over the past three years…with conflicting reports out of Iraq on Tuesday, US oil prices rose to as high as $52.25 on Tuesday morning, then dropped to as low as $51.21 Tuesday afternoon, but ended the day at  $51.88 a barrel, up just 1 cent on the day….prices then rose 16 cents to a three week high close of $52.04 a barrel on Wednesday, as EIA data showed a larger-than-expected draw from U.S. crude stockpiles on near record oil exports…oil prices then fell for the first time in 5 days on Thursday, dropping 75 cents to $51.29 a barrel, pressured by larger-than-expected product inventories and profit-taking after the recent run-up, as Iraq occupied Kirkuk and promised that the oil would continue flowing….US WTI crude futures for November were then mostly flat on Friday in see-saw trading, but ended the session 18 cents higher at $51.47 per barrel, after Baker Hughes reported the largest drilling rig pull back in 20 months… 

The Latest US Oil Data from the EIA

this week’s US oil data from the US Energy Information Administration, covering details for the week ending October 13th, showed both the aforementioned large increase in our oil exports as well as a large drop in our domestic production of oil, which meant that a larger quantity of oil had to be pulled out of storage to meet the needs of our refineries, which also slowed….our imports of crude oil fell by an average of 134,000 barrels per day to an average of 7,483,000 barrels per day during the week, while at the same time our exports of crude oil rose by 528,000 barrels per day to a near record 1,798,000 barrels per day, which meant that our effective imports netted out to an average of 6,347,000 barrels per day during the week, 662,000 barrels per day less than during the prior week…at the same time, our field production of crude oil fell by 1,047,000 barrels per day to an average of 8,406,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 14,091,000 barrels per day during the reported week…

at the same time, US oil refineries were using 15,439,000 barrels of crude per day, 819,000 barrels per day less than they used during the prior week, while during the same period 927,000 barrels of oil per day were being withdrawn from oil storage facilities in the US…hence, this week’s crude oil figures from the EIA seem to indicate that our total supply of oil from net imports, from oilfield production and from storage, was 421,000 fewer barrels per day than what refineries reported they used during the week…to account for that discrepancy, the EIA needed to insert a (+421,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, which they label in their footnotes as “unaccounted for crude oil”…

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,435,000 barrels per day, 1.9% below the imports of the same four-week period last year….the 927,000 barrel per day withdrawal from our total crude inventories came about on a 819,000 barrel per day withdraw from our commercial stocks of crude oil and a 108,000 barrel per day emergency withdrawal of oil from our Strategic Petroleum Reserve, which apparently is still being tapped to address short term spot shortages caused by this year’s hurricanes…this week’s 1,074,000 barrel per day decrease in our crude oil production was due to a 1,084,000 barrel per day drop in output from wells in the lower 48 states due to Hurricane Nate, the largest drop since August 2012, while output from Alaska rose by 9,000 barrels per day…the 8,406,000 barrels of crude per day that were produced by US wells during the week ending October 13th was the least oil that we’ve produced since the last week of April 2014, 4.2% less than the 8,770,000 barrels per day we were producing at the end of 2016, but just fractionally lower than the 8,464,000 barrels per day of oil we produced during the during the week ending October 14th a year ago…

US oil refineries were operating at just 84.5% of their capacity in using those 15,439,000 barrels of crude per day, down from 89.2% of capacity the prior week, a reduction in throughput that was mostly due to normal seasonal maintenance…. the 15,439,000 barrels of oil that were refined this week was 12.9% less than the 17,725,000 barrels per day that were being refined the week before Hurricane Harvey struck, just seven weeks earlier, but it was actually a bit more than the 15,370,000 barrels of crude per day that were being processed during week ending October 14th, 2016, when refineries were operating at 85.0% of capacity…

despite the slowdown in US oil refining, gasoline production from our refineries was higher, increasing by 290,000 barrels per day to 10,031,000 barrels per day during the week ending October 13th, which was also 5.6% higher than the 9,935,000 barrels of gasoline that were being produced daily during the comparable week a year ago….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) fell by 180,000 barrels per day to 4,784,000 barrels per day, which was 4.0% more than the 4,599,000 barrels per day of distillates that were being produced during the week ending October 14th last year….  

with the increase in our gasoline production, our end of the week gasoline inventories rose by 908,000 barrels to 222,334,000 barrels by October 13th, the fourth increase in gasoline inventories in a row…that was even as our exports of gasoline rose by 227,000 barrels per day to 636,000 barrels per day, while our imports of gasoline fell by 170,000 barrels per day to 690,000 barrels per day…offsetting that imbalance, however, our domestic consumption of gasoline fell by 344,000 barrels per day to 9,136,000 barrels per day at the same time…still, with significant gasoline supply withdrawals in 12 out of the last 18 weeks, our gasoline inventories are still down by 8.3% from June 9th’s level of 242,444,000 barrels, and 2.5% below last October 14th’s level of 227,967,000 barrels, even as they are still roughly 7.2% above the 10 year average of gasoline supplies for this time of the year…  

even with the decrease in our distillates production, our supplies of distillate fuels rose by 528,000 barrels to 134,487,000 barrels over the week ending October 13th, the first increase in seven weeks…that was because the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 171,000 barrels per day to 3,477,000 barrels per day, the lowest seasonal level in more than 10 years, and because our exports of distillates fell by 273,000 barrels per day to 1,339,000 barrels per day, while our imports of distillates rose by 23,000 barrels per day to 107,000 barrels per day…however, even after this week’s increase, our distillate inventories ended the week still 13.6% lower than the 155,732,000 barrels that we had stored on October 14th, 2016, and 5.5% lower than the 10 year average for distillates stocks for this time of the year

finally, with our oil exports continuing at near record levels, our commercial crude oil inventories fell for the 24th time in the past 28 weeks, decreasing by 5,731,000 barrels, from 462,216,000 barrels on October 6th to 456,485,000 barrels on October 13th…while our oil inventories as of October 13th were 2.6% below the 468,711,000 barrels of oil we had stored on October 14th of 2016, they were still 2.7% higher than the 444,618,000 barrels in of oil that were in storage on October 16th of 2015, and 31.8% greater than the 346,414,000 barrels of oil we had in storage on October 17th of 2014…

This Week’s Rig Count

US drilling activity decreased for 9th time in the past 12 weeks during the week ending October 20th, with this week’s total pullback the largest since the week ending February 19th 2016…Baker Hughes reported that the total count of active rotary rigs running in the US fell by 15 rigs to 913 rigs in the week ending Friday, which was still 360 more rigs than the 553 rigs that were deployed as of the October 21st report in 2016, while it was less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014….

the number of rigs drilling for oil was down by 7 rigs to 736 rigs this week, their 10th decrease in 11 weeks, which still left active oil rigs up by 293 over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014…at the same time, the count of drilling rigs targeting natural gas formations decreased by 8 rigs to 177 rigs this week, which was the smallest natural gas rig deployment since May 10th and just 69 more gas rigs than the 108 natural gas rigs that were drilling a year ago, and way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008…

there was no change in offshore drilling this week, as 20 platforms, all in the Gulf of Mexico, continued to see drilling activity, down from the 22 in the Gulf and one offshore from Alaska a year ago….the count of active horizontal drilling rigs was down by 15 rigs to 771 rigs this week, which was the smallest number of working horizontal rigs since July 2nd…however, that was still up by 326 rigs from the 445 horizontal rigs that were in use in the US on October 21st of last year, while down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014….at the same time, the vertical rig count was down by 1 rig to 62 vertical rigs this week, but still up from the 57 vertical rigs that were deployed during the same week last year….on the other hand, the directional rig count was up by 1 rig to 80 rigs this week, which was also up from the 51 directional rigs that were deployed on October 21st of of 2016…..

the details on this week’s changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes…the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of October 20th, the second column shows the change in the number of working rigs between last week’s count (October 13th) and this week’s (October 20th) count, the third column shows last week’s October 13th active rig count, the 4th column shows the change between the number of rigs running on Friday and the equivalent Friday a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was for the 21st of October, 2016…      

October 20, 2017 rig count summary

it’s pretty clear from the first table which states saw rig shutdowns this past week, but the table of major basin variances misses a lot of this week’s changes; Baker Hughes details indicate that 5 oil rigs and 4 gas rigs were shut down in “other’ basins, which they do not name…for starters, we know that Alaska had two rigs shut down, but none of the Alaskan oil fields are listed, so that accounts for two of those missing from the basin table…likewise for Wyoming, where the 2 rig reduction, which could have been pulled out of the Powder River basin, is not accounted for in the Baker Hughes basin table…Utah also saw a rig shut down, while none of the Utah basins, such as the Unita, are listed above..then, since Louisiana had one rig shut down in the Haynesville while one rig started in the south, we can figure there’s two Haynesville rigs that must have been shut down in Texas…since there were two rigs added in the Eagle Ford in south Texas while 5 rigs were pulled out of the Texas side of the Permian, three more of the unaccounted for basin reductions must have been in Texas…likewise, there’s an unaccounted rig shutdown in Oklahoma, since there were 2 rigs added in the Cana Woodford while one was pulled out of the Ardmore Woodford…and outside of the states included among the major producers in the first table above, Illinois also had a rig shut down this week, leaving them with just 1 rig still running, the same number they had running on October 21st a year ago…

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September’s industrial production, new housing construction, and existing home sales

regular reports released this past week included Industrial production and Capacity Utilization for September from the Fed, the September report on New Residential Construction from the Census Bureau, the Existing Home Sales Report for September from the National Association of Realtors (NAR), and the Regional and State Employment and Unemployment report for September from the Bureau of Labor Statistics…this week also saw the release of the first two regional Fed manufacturing surveys for October: the Empire State Manufacturing Survey for October from the New York Fed, which covers New York and northern New Jersey, reported their headline general business conditions index rose from +24.4 in September to a three year high of +30.2 in October, suggesting that First District manufacturing was growing at a robust pace, while the Philadelphia Fed Manufacturing Survey for October, covering most of Pennsylvania, southern New Jersey, and Delaware, reported its broadest diffusion index of manufacturing conditions rose from +23.8 in September to +27.9 in October, also suggesting ongoing strong growth in that region’s manufacturing…

Industrial Production Up 0.3% in September, after major revisions to August and July

the Fed’s G17 release on Industrial production and Capacity Utilization indicated that industrial production increased by 0.3% in September after falling by 0.7% in August…the percentage change from July to August was revised from down 0.9% to down 0.7%, while the percentage change from June to July was revised from up 0.4% to down 0.1%….the industrial production index, with the benchmark now set for average 2012 production to equal to 100.0, rose from 104.3 in August to 104.6 in September; at the same time, the index for August was revised from the previously reported 104.7 to 104.3, while the July index was revised from 105.7 to 105.1, the June reading for the index was revised from 105.3 to 105.2, and the May index was revised from 105.1 to 105.0….for the 3rd quarter as compared to the 2nd quarter, industrial production fell at a 1.5% annual rate, its first quarterly decrease since the second quarter of 2016….however, total industrial production was still 1.6% higher than in September a year earlier….

the manufacturing index, which accounts for more than 77% of the total IP index, increased by 0.1, from 102.9 in August to 103.0 in September, after August’s manufacturing index was revised down from 103.3…July’s manufacturing index was also revised lower, from 103.6 to 103.2…meanwhile, the mining index, which includes oil and gas well drilling, rose from 109.7 in August to 110.1 in September, after the August index was revised down from 110.3….however, the mining index is still 9.8% higher than it was a year ago….finally, the utility index, which often fluctuates due to above or below normal temperatures, rose 1.5% in September, from 98.9 to 100.4, after the previously reported 5.5% August decrease was revised to one of 4.9%, while the previously reported 1.5% July increase was revised lower, to an increase of 0.5%…

this report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose to 76.0% in September from 75.8% in August, which had previously been reported at 76.1% …capacity utilization of NAICS durable goods production facilities rose from 74.2% in August to 74.9% in September, after August’s figure was revised down from 74.5%, while capacity utilization for non-durables producers fell from a downwardly revised 77.0% to 76.3%…capacity utilization for the mining sector rose to 83.5% in September, up from 83.4% in August, which was originally reported as 83.9%, while utilities were operating at 74.8% of capacity during September, up from their 73.7% of capacity during August, which was revised up from 73.9%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories…. 

Housing Starts, Building Permits Reported Down in September

the September report on New Residential Construction (pdf) from the Census Bureau reported that their widely watched estimate of new housing units that were started during the month was at a seasonally adjusted annual rate of 1,127,000, which was 4.7 percent (±8.1 percent)* below the revised August estimated annual rate of 1,183,000 housing unit starts, but was 6.1 percent (±8.8 percent)* above last September’s pace of 1,132,000 housing starts a year…the asterisks indicate that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past month, or even over the past year, with the figure in parenthesis the most likely range of the change indicated; in other words, September’s housing starts could have been up by 3.4% or down by as much as 12.8% from those of August, with even larger revisions possible after a number of months…in this report, the annual rate for August housing starts was revised from the 1,180,000 reported last month to 1,183,000, while July starts, which were first reported at a 1,155,000 annual rate, were revised up from last month’s initial revised figure of 1,190,000 annually to 1,185,000 annually with this report….

those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that 101,300 housing units were started in September, down from the 103,800 units started in August…of those housing units started in September, an estimated 72,300 were single family homes and 27,900 were units in structures with more than 5 units, down from the revised 77,900 single family starts in August, but up from the 25,200 units started in structures with more than 5 units in August…

the monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data…in September, Census estimated new building permits were being issued at a seasonally adjusted annual rate of 1,215,000 housing units, which was 4.5 percent (±1.6 percent) below the revised August rate of 1,272,000 permits, and was 4.3 percent (±1.7 percent) below the rate of building permit issuance in September a year earlier…the annual rate for housing permits issued in August was revised from 1,300,000 down to 1,272,000  annually….again, these annual estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for 100,500 housing units were issued in September, down from the revised estimate of 119,600 new permits issued in August…the September permits included 66,300 permits for single family homes, down from 76,600 single family permits in August, and 31,000 permits for housing units in apartment buildings with 5 or more units, down from 39,600 such multifamily permits a month earlier…

for more graphs and commentary on this report, see the following two posts by Bill McBride at Calculated Risk: Housing Starts decreased to 1.127 Million Annual Rate in September and Comments on September Housing Starts… 

September Existing Home Sales Inch Up from August

the National Association of Realtors (NAR) reported that their seasonally adjusted count of existing home sales rose by 0.7% from August to September, the first increase in four months, projecting that 5.39 million homes would sell over an entire year if the September home sales pace were extrapolated over that year, a pace that was still 1.5% below the annual sales rate projected in September of a year ago; August sales at a 5.35 million annual rate were unrevised from last month’s report…the NAR also reported that the median sales price for all existing-home types was $245,100 in September, down from $253,100 in August but 4.4% higher than in September a year earlier, which they say “marks the 67th straight month of year-over-year gains“…the NAR press release, which is titled “Existing-Home Sales Inch 0.7 Percent Higher in September“, is in easy to read plain English, so if you’re interested in the details on housing inventories, cash sales, distressed sales, first time home buyers, etc., you can easily find them in that press release…as sales of existing properties do not add to our national output, neither these home sales nor the prices for which these homes sell are included in GDP, except insofar as real estate, local government and banking services are rendered during the selling process…

since this report is entirely seasonally adjusted and at a not very informative annual rate, we like to look at the raw data overview (pdf), which gives us a close approximation to the actual number of homes that sold each month…this unadjusted data indicates that roughly 465,000 homes sold in September, down by 13.1% from the 535,000 homes that sold in August, and down by 4.3% from the 486,000 homes that sold in September of last year, so we can see that it was just the seasonal adjustment that caused the annualized published figures to show an increase…that same pdf indicates that the median home selling price for all housing types fell 2.4%, from a revised $253,100 in August to $245,100 in September, while the average home sales price was $286,700, down 3.1% from the $294,400 average sales price in August, but up 3.5% from the $277,000 average home sales price of September a year ago, with the regional average home sales prices ranging from a low of $225,900 in the Midwest to a high of $386,200 in the West… for both seasonally adjusted and unadjusted graphs and additional commentary on this report, see the following two posts from Bill McBride at Calculated Risk: NAR: “Existing-Home Sales Inch 0.7 Percent Higher in September” and A Few Comments on September Existing Home Sales

 

(the above is the synopsis that accompanied my regular sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most from the aforementioned GGO posts, contact me…)

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tables and graphs for October 21

rig count summary:

October 20, 2017 rig count summary

US crude & product exports:

October 18 2017 oil & oil products exports

US oil production:

October 21 2017 US oil production as of Oct 13

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