Gauging the fitness of the industry by measuring demand for OCTG throughout the supply chain across the lower 48 is the goal every quarter and what sets The OCTG Situation Report apart from all others. Thus, we commence our 38th year in business by crunching some key numbers. Our exclusive 4Q23 inventory survey proved that oil patch operatives were resolved to shed some ‘pounds’ heading into the new year. Overall prime, finished, US upstream OCTG inventories were cut by a healthy amount, thinning the total inventory count to the leanest volume of L48 inventory stockpiles since late 2022, an attainment that puts the market in good shape entering 2024.
These improved inventory stats tip the scales in favor of a healthier supply-demand balance as 2024 unfolds. Our separate survey of “select” distributors in the US demonstrated this group’s continued resolution to exercising discipline in managing their inventories.
Another quarter of steely pricing helped in paring excess inventories throughout Q4. It also didn’t hurt that imported shipments for the quarter are projected to be the lowest since March of 2021. Our January market intel drills down on each of the OCTG category breakouts.
We also provide the skinny on our active versus stalled and/or obsolete OCTG inventories survey this month. This annual survey is another big help in further dissecting inventories and providing color on the past quarter’s results.
By now you know we lean heavily on our inventory metrics to illuminate apparent consumption and months of supply data points. Without accurate inventory counts, consumption and months of supply stats are nothing more than hypotheses. With the latest set of obsolete stats in hand we triangulated this intel into a new quarterly months of supply figure to compare to the prevailing quarterly months of supply data point.
To further parse inventories of OCTG on the ground and shore up our ‘Situational’ analysis, we also performed an in-depth examination into the portion of upstream inventories dedicated to the GOM/deepwater segment for this past quarter. The net result is shared in our January Report.
Despite the weighty talk of continued profit growth over production growth mixed with increasing M&A, there’s no reason to throw in the towel. In fact, while early conjecture has new year CAPEX trending only flat to slightly up, operators not only continue to do more with less but according to S&P Global Commodity Insights, “the US is producing more oil than any country in history…while output continues to surge to all-time high levels.” This unheralded news lends further support to continued well activity and encouraging prospects for OCTG. While it often feels like our industry’s become so conditioned to feeling pessimistic it’s hard to consider other scenarios, we remind readers of the old adage that the ‘ironman’ and women know very well: “no pain, no gain!”
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