The standoff between OPEC and the
US oil producers seems to have reached a critical point; OPEC countries are unwilling to taper oil production in hopes of driving per-barrel costs up because they’re concerned that doing so could lose market share. As it stands,
US production costs are higher than those in countries like Saudi Arabia, and OPEC would rather make less money and maintain its customer base than “fold first”; as of Tuesday morning, prices had fallen to $67.95 per barrel.
“Overall, global production capacity is just too high,” according to one Texas-based source. And while some are concerned that falling oil prices could place negative pricing pressure on the
US oil country
tubular goods (OCTG) spot market, others point out that if drilling is halted, “it won’t matter if mills are giving it away, if it’s not needed it’s not needed”. Another question relates to how the current situation will impact contract pricing into 2015, and that if oil prices do start to rebound, if this could place upward pricing pressure on
US spot market prices at some point next year.
Although it’s still too soon to determine how falling oil prices will impact the market in the long term, it is safe to say that just about everyone is keeping close tabs on the situation at hand. In terms of pricing, nothing has moved just yet.
The most commonly reported spot prices for
US unfinished J55 ERW OCTG casing are still holding sideways in the approximate range of $59.00-$61.00 cwt. ($1,300-$1344/mt or $1,180-$1,220/nt) ex-Midwest mill, while futures offer prices from Korean producers for unfinished J55 ERW OCTG casing are still trending at approximately $980-$1,000 cwt. ($49.00-$50.00 cwt. ($1,080-$1,102/mt or $980-$1,000/nt) DDP loaded truck in
US Gulf coast ports. Taiwanese offers have also held steady since our last report a week ago, still at $46.00-$47.00 cwt. ($1,014-$1,036/mt or $920-$940/nt, DDP loaded truck in
US Gulf coast ports.