Tracking the nation’s levels of oil inventory is one way to gain insight into how supplies might balance against demand in the market for oil, and how the effect may play out on oil prices. In many ways, these effects are fundamental economics. Unlike consumer goods though, oil is a commodity that sees trading action in the market. Changes in the size of the nation’s oil inventories can affect oil prices within minutes.
The U.S. Energy Information Administration (EIA) publishes weekly domestic inventory updates that show how inventories other than strategic ones change week-on-week. Increases in stockpile indicate a drop in end-user demand, and decreases in stockpile indicate a rise in demand. Inventories in the U.S., in June, dropped significantly. The effect was a 1% rise in oil futures.
Prices Hit Eight-Week High in July
In July, U.S. crude inventories continued to decline, sending oil prices to an eight-week high. There has been considerable optimism over forecasts that the market is on track to arrive at equilibrium. Crude futures for September deliveries are at $44.14 a barrel, close to the last major eight-week peak of $49.24.
Of note for U.S. oil drillers is news that shale production has been slowing down all through July. This has been the result of plans among companies dealing in oilfield services to reduce spending.
For drilling contractors interested in bucking the trend, this may be the time. Sigma Drilling Technologies, a major manufacturer of oil extraction equipment such as an advanced pulsation dampener bladder replacements and mud pump pulsation dampeners, believes investing in reliable operations is the most sensible option available in current conditions involving low inventories and steady prices.
During times of rising prices, reliable, cost-effective production abilities offer improved profitability and greater control over market fluctuations. Get more for your equipment investment in any market with Sigma’s technology. Call 281-656-9298 or fill out our contact form today to learn more!
