According to the most recent data from Baker Hughes, the number of
US rotary rigs drilling for oil fell by one more last week, which brings the current number of
US rigs drilling for oil to 515. Rigs directed toward drilling for natural are also down an additional 13 rigs since our last report a week ago. Current year-on-year oil exploration efforts continue to be down 62.3 percent; year-on-year gas exploration is down by 55.0 percent. The weekly average of crude oil spot prices is 35.0 percent lower than last year and natural gas spot prices are 22.4 percent lower than last year.
Not surprisingly,
US domestic energy pipe mills continue to suffer, as is evidenced by this week’s announcement by Tenaris that it would be laying off 100 workers at its Blytheville, Arkansas welding pipe mill. According to the company press release, "Adjustments are due to the price of oil, which hit a 12-year low, and the continued reduction of drilling activity. Compounding the situation are excess inventories, created in part by ongoing imports of unfairly traded oil country
tubular goods.”
Not surprisingly, all pricing continues to trend flexible. The average
US domestic spot market price range has held lateral week-on-week, at approximately $42.50-$43.50 cwt. ($937-$959/mt or $850-$870/nt), ex-Midwest mill, while offshore futures prices from Korean and Taiwanese producers are also unchanged, $27.50-$29.50 cwt. ($606-$650/mt or $550-$590/nt), DDP loaded truck in
US Gulf Coast ports. Service center and trader sources continue to report that all pricing is negotiable based on the size of the order. “Mills are desperate for orders and if they can find a way to make a price work, they will,” one source said.