Environment and Energy
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/media/k2/items/src/ddf5baa86c391c2fc2978f2bfca6ed81.jpg)
SMU Energy Analysis for April: Oil Demand Strengthens
Written by Brett Linton
April 8, 2021
The Energy Information Administration’s April Short-Term Energy Outlook remains subject to heightened levels of uncertainty as responses to COVID-19 continue to evolve. Reduced economic activity from the pandemic caused a decline in 2020 energy demand and supply. As of April 6, the EIA expects oil demand to strengthen, as COVID-19 vaccination rates and global economic activity increase. Gasoline consumption is therefore expected to rise as more vehicles return to the roadways. Natural gas prices have declined, EIA reports, as the market disruptions that drove prices high in February have substantually lessened. EIA forecasts a mostly balanced global oil market for the remainder of 2021.
Spot Prices
The spot market price for West Texas Intermediate (WTI) has declined since our last energy update, now at $60.66 per barrel as of April 2. Natural gas prices at the Henry Hub in Oklahoma have returned to normal levels, now at $2.54 MMBTU (million British Thermal Units) as of April 2. The market has adjusted from the mid-February spike when winter storms impacted much of the nation and the scarcity of natural gas and rising demand drove spot prices through the roof. Figure 1 shows the weekly average spot prices for each product through last week.
Rig Counts
The number of active U.S. oil and gas drill rigs has continued to recover since mid-2020, up to 430 active drill rigs as of last Friday. That total is comprised of 337 oil rigs, 91 gas rigs and 2 miscellaneous rigs, according to the latest data from Baker Hughes (Figure 2). While up over recent months, active drill rigs are still down 46 percent from the March 2020 level of 793 rigs, just prior to the coronavirus shutdowns. The table below compares the current U.S., Canada and International rig counts to historical levels.
U.S. oil and gas production are heavily concentrated in Texas, Oklahoma, North Dakota and New Mexico, which have all seen declines of 40-73 percent since March of last year. The most active state, Texas, now has 207 active rigs in operation, the highest level seen since April 24, 2020. Texas rigs had plummeted from 407 in March 2020 to 97 rigs in August 2020 (Figure 3).
Stock Levels
U.S. total crude oil stocks in 2020 had surged from mid-March through July, but have steadily declined since then. The latest level is up slightly over our last update to 1.136 billion barrels as of April 2, and up from 1.119 billion barrels the same time last year (Figure 4).
Trends in energy prices and rig counts are a predictor of demand for oil country tubular products (OCTG), line pipe and other steel products.
By Brett Linton, Brett@SteelMarketUpdate.com
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/04/SMU_BL_headshot-V4-150x150.png)
Brett Linton
Read more from Brett LintonLatest in Environment and Energy
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/12/Rig_count_pic_3-scaled.jpg)
Active rig counts recover in US, slip in Canada
US drill rig activity moved back up last week after drifting lower for four straight weeks. Meanwhile, Canadian counts slipped for the first time after a seven-week rally, according to the latest data from Baker Hughes.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/07/Renewable-Energy-2023-07-21-at-4.46.22-PM.png)
Origami Solar keeps supply chain domestic with three US fabricators
Bend, Ore.-based Origami Solar has partnered with three US steel fabricators to prioritize a domestic supply chain for its solar frames.
Price: Blast furnaces aren’t necessary to make most advanced steels
When it comes to steel decarbonization, we do not need to compromise our climate ambition to make the types of demanding steel products needed for our 21st-century economy. Nevertheless, many of the world’s highest-emitting steel producers and their allies would have you believe that one cannot be done without the other. They are wrong. They […]
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/Cliffs_logo2.2.png)
Cliffs reaches emissions goals early, sets new targets
After achieving its 2030 greenhouse gas (GHG) emissions reduction targets well ahead of schedule, Cleveland-Cliffs Inc. has set new reduction goals.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2024/05/responsiblesteel.png)
Op-Ed: Steel emissions policies have not forgotten about recycling
Why have steel emissions policies forgotten about recycling? The short answer is that they haven’t. ResponsibleSteel was recently characterized in an article featured in the SMU Executive Newsletter as advocating for steel emissions policies which “discourage recycling.” In fact, ResponsibleSteel sees recycled scrap as playing a critical role in driving steel decarbonization. Recent revisions to […]