This Week’s Market Buzz

• Recent oil price gains have eased after government data indicated that U.S. crude stocks have plunged more than expected as imports have declined and drillers pumped more product. Crude inventories fell by 7.6 million barrels in the last week, compared with analysts’ expectations for a decrease of 2.9 million barrels. Brent crude, the global benchmark, was down 9 cents, or 1 percent, at $47.43 a barrel. U.S. crude gained 17 cents to $45.21.

• Sand sales, and prices, have been rising this year because shale producers are using more sand per well and drilling more wells, according to Brad Handler, oilfield services analyst at Jefferies LLC. Sand-mining capacity nationwide today is about 85 million tons, but Handler projected that producers will need about 100 million tons in 2018. Prices for frac sand obtained at the mine are between $35 and $38 per ton, up from a recent bottom of about $18 to $19 a ton, Handler said. Much of the sand supplied to West Texas comes from mines in Wisconsin and Illinois, and transportation adds about $90 per ton to reach the Permian Basin. Sand represents about 12 percent of the cost of drilling and fracturing a well, he said. With oil prices under $45 a barrel, producers are eager to cut sand supply costs.

• Select Sands said the company now anticipates second quarter 2017 total Frac/Industrial sand sales volumes to be at least twice the 22,427 tons sold and shipped during the first quarter. Zig Vitols, president and chief executive officer, commented, “I have been extremely pleased with the progress we have made since starting commercial production early this year. During the second quarter, our dedicated management team and operational personnel have continued to do an outstanding job of ensuring that we safely produce premium quality sand. We are currently focused on enhancing our logistics by working closely with customers to secure additional rail cars. The build-out of our delivery capability is expected to allow us to utilize our maximum production rate late in the second half of 2017.”

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