Doing the Math on OCTG in Q3

November cover Image 2x3 300

Photo Courtesy ConocoPhillips Company

Susan Murphy | The OCTG Situation Report

Susan Murphy | Publisher + Editor-in-Chief

As the class of “2020” reconvenes at school this month we too are putting on our thinking caps and dusting off our previous 2019 forecasts to see if they stood the test of time. Reviewing the past couple months, it’s almost as if fall descended on the oil patch in June when we detected a chill in the air during our midyear market conversations. Sadly, our below-average updated annual projections now reflect the cooling drilling activity.

“Old school” conventional thinking would have range-bound oil prices in the mid-50s to low-60s all but guarantee a steady stream of OCTG demand but that notion is virtually a pipe dream in 2019. With the estranged environment that E&Ps find themselves in relationship to Wall Street there are no absolutes when it comes to predicting operator behavior. Given that, we soldiered through the minefield nonetheless. 

Looking back on what now feels like ancient history (November 2018), our analysis (based on more positive bellwethers at the time) led us to project slightly improved forecasts for the rig count and consumption than we saw for the full year 2018. Upon further consideration of our ‘altered’ reality and the fact “change is the only constant” we revised our calculations for the rig count, consumption and OCTG pricing in this month’s Report. Our prognosis at this juncture is for a steeper rig count decline although a potential uptick from the recent drone attack on one of Saudi Arabia’s largest oilfields knocking out half its oil capacity could increase our prediction. Along with our lowered expectations for the rig count we anticipate additional softening for OCTG demand and prices, too. 

On a side note, in our review of a profusion of stats it was unusual to see how closely 2019 consumption has tracked with 2018. In fact, our consumption figure YTD/July was so close to July of 2018 as to render the percent change Y/Y of no significant change. That was a first. This only reinforces how many could assume this year would unfold similarly considering all prior indicators and the fact E&Ps haven’t always displayed this degree of discipline. Unfortunately, that’s where the similarity ends as the delta between 2018 and 2019 consumption based on what we’ve modeled for the remaining months broadens significantly from there.  

Following our exclusive quarterly OCTG Inventory Yard Survey in October we’ll work to fill in “the blanks” on 2020 as we prepare to issue our next set of OCTG forecasts in the November Report. It is there where we will pore over our many lessons learned to answer the age-old question: what does the new year hold for OCTG? Until then we can’t help but wonder, is the writing on the wall or will we be saved by the bell? 

NOTE: Our monthly blog posts offer a slice of the content we publish in The OCTG Situation Report every month. For a complimentary copy of our intel please visit: https://www.octgsituationreport.com/subscribe

Photo Courtesy ConocoPhillips Company

About The OCTG Situation Report®

Susan Murphy is the Publisher + Editor in Chief of The OCTG Situation Report®, a leading authority focused on the North American Oil Country Tubular Goods market. Susan has worked alongside the founder of The OCTG Situation Report®, Duane Murphy (and yes, there is a family connection!) for the past decade assisting in various aspects of producing the monthly publication and special projects including market research and development. It had long been suspected that Susan carried the 'OCTGene,' a fact that was confirmed when she took the reins in 2012. A native of Michigan and now practicing cowgirl, Susan employs her education from both the University of Michigan and Michigan State University bringing her expertise in the areas of research, marketing, branding and creative and technical writing to The Report. She has also enjoyed a successful business career as a lauded entrepreneur, running her own brand/marketing and advertising/design firms.
This entry was posted in 2019 E&P Budgets, Crude Oil Prices, E&P, E&P spending, Energy, ERW Pipe, Hot Rolled Coil, HRC, Inventory, OCTG, OCTG 2019 Forecast, OCTG Consumption, OCTG Consumption & Pricing, OCTG domestic shipments, OCTG Exports, OCTG Imports, OCTG inventories, OCTG Inventory Survey, OCTG Mills, OCTG Pricing, OCTG Processors, OCTG Producers, OCTG Spot Prices, Oil & Gas Industry, Oil & Gas Pricing, Oil Country Tublular Goods, Oil Patch and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

1 Response to Doing the Math on OCTG in Q3

  1. Steve Wilson says:

    THANKS, QUOTED!

    SW

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s