Oil and Gas Update - August 2016

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August 1, 2016

The price of crude oil continued a three-month slide in July as U.S. and worldwide inventories remained stubbornly high. But prices remained above $40 a barrel, encouraging operators to put more drilling rigs back to work.

The number of rigs working in Texas continued to climb, rising from 194 at the end of June to 217 in the Baker Hughes weekly report on July 22. After reaching a 17-year low of 404 in early June, the number of drilling rigs operating in the U.S. had rebounded to 462 in the July 22 report. Texas' share of all the rigs working in the U.S. was 47 percent.

The slow decline in U.S. production has not had much impact on the massive inventory levels. The 521 million barrels in storage was historically high for the summer, reported the U.S. Energy Information Administration. Gasoline inventories also remained near record highs, the agency reported.

The EIA reported on July 27 that U.S. crude production had fallen to 8.52 million barrels a day, down 160,000 barrels a day from a month earlier, and down 900,000 barrels a day a year earlier.

In Texas, preliminary statewide oil production figures from the Railroad Commission of Texas showed that daily production in May fell to 2.36 million barrels, compared to 2.49 million barrels in the previous month and 2.43 million barrels in May 2015.

The commission reported that 656 new drilling permits were issued in June, up from 606 in May but down from the 851 issued in June 2015.

In Senate District 19, Reeves County dropped to number 11 from number 8 among Texas counties for oil production but remained at number 6 for condensate production. The number one spot for condensate production continued to be held by Dimmit County, which also remained at number 4 for natural gas production.