Oil, Covid-19 Trouble US Tubulars Market
03.30.2020 - NEWS

March 30, 2020 [Kallanish Energy] – The dual shocks of low oil prices and Covid-19 paralysis continue to hammer the US energy steel sector, Kallanish Energy understands.

 
A Bank of America research note released Wednesday says the global oil market is “…witnessing unprecedented supply and demand shocks.

Saudia Arabia and Russia’s stalemate over appropriate production levels has evolved into a game of chicken with regards to the price per barrel. If production is not severely curbed, available storage space will fill rapidly, the bank says.

In a severe scenario, if the market struggles to find a home for surplus barrels then oil prices might have to trade down into the teens in order to shut in oil production,” it says.

Exacerbating the issue is widespread economic shutdowns affecting a variety of oil-consuming markets, it adds.

A Gulf Coast tubular trader says the silver lining of this is the US will be well-supplied with oil for domestic consumption. Without a reinforced market bottom, however, oil producers and thus pipe and tube suppliers may be at risk.

With the world being told to stay home and hunker down, less oil and fuel will be consumed,” he says. “The USA government might step in and put [in] a price floor in order to help oil products in the USA to keep afloat.

A second Gulf Coast trader says oil country tubular goods prices are trending down, but exact levels are difficult to pinpoint due to the absence of meaningful liquidity in the market. Kallanish last assessed representative product P110 domestic welded casing at $1,050-1,100/short ton.

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