Environment and Energy
June 16, 2017
Energy Prices to Remain Low for the Long-Term
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 welded tubular goods, as well as equipment used to drill and pump oil and natural gas.
On June 12, George Friedman and Jacob L. Shapiro of Geopolitical Futures wrote, “There’s no end in sight to slumping oil prices—good news for consumers, but a dire development for major oil producers like Saudi Arabia and Russia. The rise in U.S. production is compounded by rising U.S. oil exports. Since the U.S. lifted a 40-year ban on these exports in 2015, there was a modest increase in exports in 2016, but substantial increases so far in 2017. This is a key reason prices will remain low in the long term. In late 2016, the U.S. Energy Information Administration (EIA) estimated that the United States would produce 8.7 million barrels per day on average in 2017. New estimates suggest it will produce 9.2 million barrels per day in 2017 and up to 10 million barrels per day in 2018.
