American Oil and Gas Reporter - September 2018 - 34

As Texas oil and gas employment relative to total production has shrunk, the
TPI notes the share of total Texas payroll
employment comprised by upstream oil
and gas workers has diminished as well.
June estimated direct upstream oil and

gas employment made up 1.7 percent of
the state's total employment.
Nevertheless, Texas continues to dominate the upstream energy landscape,
according to the TPI. At midyear, it
says. Texas was contributing fully 40

percent of U.S. crude oil production and
30 percent of U.S. natural gas production.
More than 50 percent of the country's
working rigs were in Texas along with
54 percent of direct upstream oil and
gas jobs.
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U.S. Oil Growth Covers OPEC Decline
WASHINGTON-U.S. producers tied
their record for crude oil production and
set a new mark for natural gas liquids
output in July, making the country the
world's only substantive source of oil
production growth so far in 2018. The
production highs also have more than
compensated for production declines
among some members of the Organization
of Petroleum Exporting Countries.
The American Petroleum Institute's
monthly statistical report for August says
July domestic crude production hit 10.7
million barrels a day, while NGL production soared to 4.4 MMbbl/d. Total
U.S. liquid fuels production is up by
more than 2.0 MMbbl/d year-over-year.
API says U.S. petroleum demand in
July sustained its highest level in 11
years, with the 20.6 MMbbl/d rate reflecting solid economic activity. However,
it adds nearly all demand growth between
June and July stemmed from residual
fuel oil and, to a much lesser extent,
kerosene jet fuel. For residual fuel oil,
the report says the change runs contrary
to typical seasonal demand and suggests
an acceleration in marine shipping activity
with escalating U.S. trade disputes.
The domestic petroleum trade balance
took a step backward in July, API notes,
with net imports increasing by 450,000
barrels a day over June. The decreases in
exports were notable in comparison with
June, it says: crude oil exports dropped
245,000 bbl/d, and refined product exports
fell 220,000 bbl/d.
"U.S. petroleum exports increased in
July during 10 of the past 12 years, so
the decline last month warrants monitoring," the report says. "A key question is
whether it's indicative of a moderation
in global economic growth, or alternatively,
a symptom of U.S. trade frictions."
Demand And Prices
U.S. petroleum demand, as measured
by total domestic petroleum deliveries,
was steady from June numbers, API says,
and up 2.8 percent compared with July
2017. The pace of annual growth reflected
July summer driving supported by solid
economic growth, industrial activity and
consumer sentiment. The report points
out year-to-date through July, petroleum
34 THE AMERICAN OIL & GAS REPORTER

demand was at its strongest since 2007,
averaging 20.3 MMbbl/d, an increase of
more than 500,000 bbl/d over the first
seven months of 2017.
Consumer gasoline demand, as measured by total motor gasoline deliveries,
was 9.6 MMbbl/d in July. According to
API, that was 0.3 percent above that of
July 2017 and the highest demand for the
month of July since 2007. Distillate deliveries for July were 4.0 MMbbl/d, a decrease
of 1.7 percent from June but a 6.6 percent
increase compared with July 2017. According to the Bureau of Labor Statistics,
the Producer Price Index for freight trucking
accelerated to 9.8 percent year-over-year
in July, from June's mark of 8.8 percent.
The U.S. Energy Information Administration revised its assessment of the
global supply/demand balance to forecast
that global markets could have returned
to a surplus beginning in the second
quarter of 2018 but that it effectively became balanced, API says. West Texas Intermediate oil prices averaged $70.98 a
barrel in July, which the report says was
an increase of $3.11 a barrel from June.
By comparison, international Brent prices
averaged $74.44 a barrel, essentially unchanged from June.
The price difference of $3.46 a barrel
between WTI and Brent prices narrowed
from more than $6.50 a barrel in June,
even as crude oil exports fell between
the two months. API says this suggests
that strong domestic refinery gross inputs
to distillation helped to buoy WTI crude
prices in July.
The increase in crude oil prices, coupled
with increased refining and petrochemical
demand, drove NGL prices up to $8.77 a
million Btus in July, an increase of 2.3
percent from June, the report indicates.
API says the backdrop for petroleum
demand remained solid in July, as indicators
of the business climate, consumer sentiment
and employment conditions underpinned
growth but also highlighted uncertainties
about the emerging effects of tariffs and
trade disputes on the economy.
Leading economic indicators continue
to suggest expanding business conditions,
the report says, pointing to the Institute
for Supply Management's Purchasing
Managers Index as one data point. The

index registered 58.1 in July, a decrease
of 2.1 percentage points from June, but
API points out any value above 50.0 suggests an expansion. The report says new
orders, production activity and employment continue to expand, while growth
occurred in 17 of the 18 manufacturing
sectors surveyed.
Increasing Output
The increases in U.S. crude oil and
NGL production have been consistent with
Baker Hughes' reported jumps in U.S. oil
drilling activity through the first half of
2018, API says. The count climbed to 861
oil-targeted rigs from 750 in January.
Combined U.S. crude oil and NGL
output increased by 2.1 MMbbl/d in July,
covering the global world oil demand
growth of 2.0 MMbbl/d. The EIA estimates
OPEC production fell by 300,000 bbl/d
year-over-year in July, led by declines in
Venezuela, Angola, Libya and Nigeria.
U.S. petroleum net imports rose
450,000 bbl/d in July, to 3.5 MMbbl/d-
with crude oil imports climbing 140,000
bbl/d against a crude oil export drop of
240,000 bbl/d, API says. With refined
products, exports fell by 220,000 bbl/d
as imports also dropped 140,000 bbl/d.
The nation's refineries set a record
for July, with gross inputs of 17.7 MMbbl/d, running at their highest percent of
capacity operated (95.3 percent) for the
month since 2004.
Total petroleum inventories in July
remained below last year's level, the
report says. Refinery throughput was
strong in July, so refined product inventories accumulated while those of crude
oil were drawn down. API indicates total
crude and refined product inventories of
1.25 billion barrels increased in July by
100,000 barrels over June, but remained
5.1 percent below those of July 2017.
Total U.S. petroleum inventories remained
above the median of the five-year range-
1.24 million barrels.
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American Oil and Gas Reporter - September 2018

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