Environment and Energy
October 15, 2016
Oil and Gas Prices and Rotary Rig Counts
Written by Peter Wright
The prices of oil and natural gas drive the consumption of oil country tubular goods (OCTG) and related steel products. The energy markets represent a large portion of the hot rolled coil used to make pipe and tube as well as equipment used to drill and pump oil and natural gas.
On October 14th Economy.com had this to say; oil prices surged in the first week of October following OPEC’s announcement in late September that it stands ready to cut output in an effort to boost prices. Following an extraordinary session on September 28, OPEC members agreed on a production target ranging from 32.5 million to 33 million barrels per day. OPEC said it will cut up to 750,000 barrels per day from current output levels to reach that goal. According to Bloomberg estimates, OPEC crude oil output averaged 33.75 mbd in September, up from 33.58 mbd in the previous month and a record high for the 14-member oil cartel. Thus the price of West Texas Intermediate crude topped $50 per barrel in early October for the first time since June. Oil prices got an additional boost on October 10 after Saudi Arabia’s energy minister said $60 per barrel oil was not unthinkable before year’s end. Saudi Arabia remains by far the single most influential oil producer in the market. Any potential OPEC agreement will require Saudi Arabia to make the largest production cut of any OPEC member.
