US OCTG market cringes as oil prices remain volatile

Tuesday, 28 April 2020 19:19:02 (GMT+3)   |   San Diego
       

Steep declines in global oil demand have been great for gas prices, sources note, but cheap oil prices have been a disaster for the oil and gas industry.

Last week, West Texas Intermediate prices plunged to negative $37+ per barrel, the first time in history that prices fell below $0. “I never, ever, in my entire life, thought something like that would be possible,” a source said. “It was completely unreal. Just when we thought the oil market couldn’t get any worse, it was like the market turned to all of us and said ‘Ok, challenge accepted. Hold my beer.’”

And while prices have since climbed back into positive territory, as of time of publication, prices were hovering at approximately $12 per barrel.

“People are just laying down their rigs at this point,” another source added.  “It’s impossible to be profitable at that level.”
The lack of desire to drill is further evidenced by last week’s rig count report. On Friday, Baker Hughes reported that the number of rigs drilling for oil had fallen by 6, to 378.

“A lot of us think that things could say in the 300s for a while, but one Negative Nancy I spoke with said he thinks it could fall as low as 150. Part of me thinks that’s impossible, but after seeing what happened with oil last week, I think anything is possible at this point,” another source added.

In terms of what this is doing to domestic J55 ERW OCTG casing prices, market players have described pricing as “a bit of a mess.”  Last week, SteelOrbis reported that spot market prices were hovering at $47.50 cwt. ($1,047/mt or $950/nt) ex-mill, although offers up to $2.50 cwt. ($55/mt or $50/nt) below that price point were quietly available. This week, sources say while that range is “probably correct for domestic prices, it would be more accurate to say that no one knows where prices are, because no one is getting any inquiries, and without inquiries, it’s impossible to quote.”
 

 


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