Last year, we posted a recap of what would be expected in 2018 oil production. We want to provide the same update for 2019 here. Keystone Energy Tools watches the market as closely as possible to make sure we’re always ahead of the curve on market trends.
Currently, the price per barrel of what? is about $51, which is a little less than it was during our last update. There were lots of fluctuations in the price throughout the year, but the production was still the highest it’s ever been in the United States. The average looks to have been over 11 million barrels per day by September.
Last year, there were lots of market changes that shaped the year as a whole. For example, Scott Pruitt, former EPA administrator, resigned last year. He was especially rough on the ethanol industry, and his resignation was met with an end to controlled sales periods for E15 fuel.
OPEC raised oil production back in June, but cut it back again in December. Once the cut helped prices get back to about $70 a barrel, the restoration of normal production continued. The interest rate increase by the US Federal Reserve can also affect pricing of crude oil from an international standpoint. Less international clients is sure to follow if the US dollar is increased in power.
Things are expected to be up and down in 2019 as well, but we want to help you better understand why.
Currently, OPIS is claiming that 2019 is going to be a transitional year for a lot of reasons. The US-China trade war is likely to make some waves in the industry as well. The Gulf has had a pretty rough 2018 overall. The prices are expected to stay low for most of 2019 in the gulf due to large inventories already on hand, as well as high production rates.
As mentioned above, 2019 is a transitional year, and one of the big reasons for that is the 2020 IMO regulation changes that are occuring on January 1st. Essentially, the IMO has stated that shipping vessels that use 5,000 to 35,000 parts per million of sulfur are no longer allowed to run at that level. Therefore, a low sulfur fuel boom is likely to start near the end of 2019. This fuel is going to be very expensive.
These new regulations are going to do more than just affect the industry. They’re going to affect global pricing on anything that is shipped via boat. Whether it’s imported Chinese goods,Japanese manufactured parts, or South American fruits and vegetables–all of them are going to see pricing changes due to the IMO regulation changes.
The Baker Hughes Rig Count shows 1050 active drilling rigs in the US as of January 18th. In the Gulf alone, there are 20 offshore drilling rigs. In the Gulf states, there are just shy of 600 rigs currently drilling as of writing this article in late January. There are quite a few market analysts that are predicting a drop in drilling during the first half of 2019. The low prices have only affected the rig count slightly, so far, but those numbers are expected to dip further in Q2.
These prices are going to affect the industry as a whole, but the Gulf region had lower prices throughout 2018. Therefore, watching this market closely is going to be more important than ever. Companies drilling here are going to make quick decisions.
What Is Keystone Energy Tools Doing?
We’re going to continue producing the best in drilling equipment for the Southern US market. Our elevators, rotary slips, inserts, float valves, etc. are all used on rigs around the Gulf. We focus on providing safety to your employees by manufacturing without cutting corners. You need properly made handling tools to provide the best working environment for your employees. Whenever you want to take safety and quality seriously, give us a call or develop your quote online.
We’re ready for 2019. Are you?