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    Environment and Energy

    SMU Energy Analysis: Rig Count Up by Nearly 12 Percent

    Written by Peter Wright


    The spot price of West Texas Intermediate (WTI) has been erratic in the last four months with two brief spikes above $70 per barrel. The oil price was $66.50 on Aug. 20. The total number of operating rigs exploring for oil and gas was up by 11.7 percent year over year and increased by nine rigs in the first three weeks of August. 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. Welded tubular goods (not including OCTG) consumed about 5.5 million tons of hot rolled sheet in 2017.

    Figure 1 shows historical oil and gas prices from January 2000 through Aug. 20, 2018. Price and inventory data come from the Energy Information Administration (EIA). Brent crude oil spot prices averaged $74 per barrel in July, largely unchanged from the average in June. EIA expects Brent spot prices to average $72 per barrel in 2018 and $71 per barrel in 2019 with WTI averaging about $6 per barrel lower than Brent prices in 2018 and in 2019.

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