Oil and Gas - Future & Price

The Importance of Oil as a Commodity

Today, the price of oil holds significant value in the commodity markets. The fluctuations in oil prices greatly impact emerging industrial economies, including the United States, Canada, and other countries worldwide. These economies heavily rely on oil to support their economic growth and meet the ever-increasing energy demands. However, the supply of crude oil is limited and cannot be easily expanded. Discovering and developing new oil reserves has become increasingly challenging. The scarcity and limited availability of oil exert a strong influence on national and international economic development. As one of the world’s most crucial energy sources, the price of oil plays a pivotal role in driving industrial and economic progress.

The United States - Leading in Oil and Gas Production

As of 2019, the United States stands as the world’s largest oil producer. Among the states, Texas takes the lead as the top oil-producing state, with a daily output of 3.17 million barrels (504,000 m3) in 2014. In 2019, the United States extracted a record high of 4.46 billion barrels of crude oil, accounting for approximately 12 million barrels per day. This represents a doubling of oil production within a decade.

During the same period from 2011 to 2014, natural gas production in the United States also reached new record highs. The production of natural gas surged by 44%, reaching 74.7 billion cubic feet per day in 2014 compared to the production in 2005. Additionally, there was a 70% increase in the production of natural gas liquids, rising from 1.74 million barrels per day in 2005 to 2.96 million barrels per day in 2014.

In 2014, petroleum and natural gas collectively accounted for 63% of the energy consumed in the United States.

United States Oil Rigs

3/23/2021 – The rig count in the United States is at a current level of 411.00. It is up from 402.00 last week resulting in a change of 2.24%. The current level is -48.11% as compared to one year ago when the Rig Count was 792.00.

For the most updated rig count information visit:

Daily Rig Count – https://app.drillinginfo.com/drc/

Government regulations and policies play an important role into the number of rigs operating. These regulations and policies on drilling for oil and gas determine the market price of crude, as well as, effects all other industries, such as casing and tubing production. The market price of OCTG products constantly fluctuates depending on these regulations and policies.

WTI and Brent Crude

Different grades of physical oil are extracted at the oil rigs. The two most popular traded grades of oil are Brent North Sea Crude and West Texas Intermediate. West Texas Intermediate is popularly known as WTI whereas Brent North Sea Crude is commonly known as Brent Crude.

Crude oil which is light and sweet can be processed into simpler products like gasoline because they contain a higher proportion of hydrocarbon molecules as compared to other oil. This is the main reason that oil like WTI and Brent Crude fetch higher prices on the commodity markets. Sweet crude oil is a classification of petroleum containing less than 0.42 percent sulfur. Oil with higher Sulphur content is undesirable because the Sulphur quantity reduces the yield of the high-value refined products like gasoline and plastics.

WTI and Brent crude is the benchmark serving as an investment tool for the industry by acting as a standard of comparison while evaluating different varieties of crude oil.

WTI
WTI crude oil is a high-quality, light, sweet oil that serves as one of the main global oil benchmarks. It contains around 0.34% sulfur which makes it sweet. A low density means it is very light and can be easily refined. It is the primary commodity of the New York Mercantile Exchange’s (NYMEX) oil futures contract.

Brent Crude
The North Sea Brent crude oil is a light, sweet crude oil which is blended. In the early 1960s, the Brent crude was recovered from the oil fields in Brent and other parts of the North Sea. It has comparatively low sulfur content compared to WTI crude oil. According to the American Petroleum Institute’s standard scale, it has a very high gravity.

Role of Crude Oil

The primary role of Crude oil is being an energy source. Crude oil is also useful in the manufacturing process of plastics. It is also used in the manufacturing of cosmetics and medicines. Crude oil is required for manufacturing other primary materials, making it the world’s most important commodity. Goldman Sachs a very prominent US investment bank estimates the proportion of crude oil used for primary materials production to be around 45 per cent.

Future of the oil and gas industry

Over the years the oil and gas industry has witnessed several highs and lows of economic cycles. However, the downturn caused by the pandemic was like never before. With the world economy crashing and the survival of most companies at risk, there was a longer-term decline in the petroleum demand. The pandemic has completely changed the way the world functions but the future is now for the oil and gas industry.

The oil and gas industry had already started facing market resistance even before the world was hit by the pandemic. However, the pandemic fast-forwarded the scenario for the industry, and what may have taken years to happen has been unfolded in just a matter of few months. To become a part of the new energy future would not be easy and many companies may have to make bold choices. Below mentioned are a few points which can help oil and gas companies to plan their strategy and direction for 2021 and the future:

Commitment towards a new administration on clean energy.
Bring changes to the end-use demand patterns and supply composition.
Follow an environmental and socially responsible investment pattern.
Adopt new talent strategies for a successful future.

The choices made by the oil and gas companies in the coming months and the trends prioritized by them will determine the path forward for the oil and gas industry for the next decade.

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We provide pipe products, casing and tubing, to the United States and Canada for the production of oil and gas.