According to the most recent data from Baker Hughes, the number of US rotary rigs drilling for oil fell by 15 rigs last week; the current number of US rigs drilling for oil now sits at 372. Rigs directed toward drilling for natural gas increased by three rigs since our last report a week ago, which brings the natural gas rig count to 92. The overall US rotary rig count is at the lowest level since Baker Hughes started counting rigs in 1949. It is further estimated that the current US rotary rig county is at the lowest level back to as far as 1860 or 1900.
Year-over-year oil exploration in the U.S. is down 54.2 percent. Gas exploration is down 60.5 percent. The weekly average of crude oil spot prices is 16.3 percent lower than last year and natural gas spot prices are 34.8 percent lower than last year.
“It’s still rough out there, all the way around,” one Midwest-based source said, citing concerns that additional layoffs within the US OCTG market are on the horizon. “I don’t know anyone who isn’t either one, trying to diversify their sales product like or two, polishing up their resume. In most cases it’s both.”
Oil prices may be up since February but few believe that the still-pending meeting of global oil producers will do anything in terms of curbing current production levels. It should also be noted global oil prices dropped earlier today, as many investors say they are still concerned about the supply glut.
All of these factors continue to place pressure on both US domestic and import pricing for J55 EWR OCTG casing. Prices within the US domestic spot market transaction range for finished J55 ERW OCTG continues to hold at approximately $42.50-$43.50 cwt.
($937-$959/mt or $850-$870/nt), ex-Midwest mill, although on-the-ground stock at service centers is said to be available at “a significant discount.” Futures offer prices from Korean and Taiwanese producers of unfinished J55 ERW OCTG casing are still trending in the approximate range of $27.50-$29.50 cwt. ($606-$650/mt or $550-$590/nt), DDP loaded truck in US Gulf Coast ports, but interest in booking offshore tons continues to trend weak.