Environment and Energy
December 19, 2017
Energy Prices, Rotary Rig Counts for December 2017
Written by Peter Wright
On Nov. 3, the spot price of West Texas Intermediate (WTI) closed above $55 per barrel and hasn’t fallen below that level through the latest data on Dec. 11. The total number of operating rigs exploring for oil and gas increased every week from Nov. 10 through Dec. 8, though at a declining rate, and in the week ending Dec. 15 the rig count declined by one. Some analysts predict the energy market will be undersupplied in 2018, lending further support to oil and gas prices. 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 Dec. 1, HFI Research wrote: “OPEC and non-OPEC members have agreed to extend cuts until the end of 2018 without any special provisions, which is what we had expected. The question for everyone now is, ‘What now?’ For us, the long-term oil bull thesis continues to play out as expected. Non-OPEC supply decreases will become more prevalent in 2018, with the bulk of the declines coming in 2019. Higher U.S. shale oil production, along with higher OPEC production, will be needed to compensate for the declines everywhere else. U.S. crude storage will also start to decline nicely as refinery throughput actually increases toward year-end vs. EIA’s current overestimation of throughput.”
