Environment and Energy
July 15, 2017
Energy Prices, Rotary Rig Counts for July 2017
Written by Peter Wright
Since our last report, the price of crude oil has continued to decline and the price of natural gas has been stable. The number of operating rigs exploring for both oil and gas has continued to increase. The prices of oil and natural gas drive the consumption of energy-related steel products including oil country tubular goods, pipe fittings and well head equipment, among others. A significant volume of hot rolled coil is used to make welded tubular goods.
On July 13, HiddenValueInvestor wrote: “A surge in exports of oil and finished petroleum products could send West Texas Intermediate crude oil prices back over $50 per barrel before the end of the year.” A recent New York Times article highlighted the new oil export terminal in Corpus Christi, Texas. According to the paper, “Suddenly buyers from all over the world are purchasing the new American supplies, from South Korea to India–even oil-rich Venezuela, which uses the light sweet crude that comes out of American shale to blend with its gooey heavy crude. The light crude is highly prized, even while global oil markets are saturated.” Light sweet crude oil has less sulfur than sour oils, and takes less time and is easier to refine than heavy oils. The lighter and sweeter the better. Some of the lightest and sweetest oil in the world is West Texas Intermediate. It is not clear how much ultimate demand there will be globally for West Texas Intermediate oil. That is because Congress only passed a bill in December 2015 to lift the 40-year ban on crude oil exports. The first shipments did not start until January 2016. The country has only been building export infrastructure and soliciting customers for one and half years. But those efforts are rapidly producing fruit.
