US oil country tubular good demand remains an open question for early 2019, but prices are showing no signs of movement as of yet, Kallanish learns from market sources.
Production decisions made by the Organization of the Petroleum Exporting Countries (OPEC) will have a strong knock-on effect on US capital expenditure decisions, says one Gulf Coast trader.
“OPEC resolve is very important to 2019,” he says. “Strength and confidence equals capex spending in the USA, [... but] concerns of global demand are real. If demand leaks too much, OPEC may not be able to fix it with production discipline.”
If OPEC production slacks off, producers in the US Permian Basin will likely pick up the slack, he says. However, with no real clear window on US import tariffs or quotas, the relationship of supply to demand remains confused.
“[... Quotas] could cause some disruption, timing problems in early 2019,” he says. “But pricing is not firming yet, which tells me that mills are not as full as they would have us believe and there seems to be plenty of pipe in the near-term.”
Kallanish currently has representative OCTG product P110 domestic welded casing at $1,550-1,600/short ton, where it has been steady for several weeks.