Preckel: Oil Market Improving, But Prices to Remain Subdued

The energy sector is definitely improving, stated Rick Preckel, partner at the consulting firm Preston Pipe, during Wednesday’s SMU Community Chat. Excess inventory of crude oil is beginning to move and rig counts are getting better. As rig counts and drilling pick up, OCTG product demand will flow quickly through the cycle. OCTG price increases are reflecting higher steel prices as well as improved demand.

Hot rolled prices are averaging $1,240 per ton and steel availability remains tight. “Any additional demand on a system that is stressed will contribute, if not to higher prices, then to more support for the steel prices out there today,” said Preckel. “Most mills charge OCTG extras. Diligence in charging that will ebb and flow based on demand in the marketplace. Extras are probably in full force right now because demand for steel is strong.”