Cloud Outlook For OCTG Demand Through 2016 By Rick W. Preckel and Paul E. Vivian ST. LOUIS-U.S. independent oil and gas companies are painfully aware of the effect the global oil price decline has had on drilling activity in 2015. Increased rig productivity aside, demand for oil country tubular goods has suffered largely the same fate as demand for drilling rigs and services. At the current rate of drilling, annualized U.S. OCTG demand is approximately 3.8 million tons, down from 7.2 million tons in 2014. OCTG inventory at the end of June was about 2.8 million tons, the equivalent of nine months of supply. Consequently, tubular product prices had fallen by 20-30 percent. For those involved in manufacturing and distributing OCTG, what is important in challenging times such as these is to first survive the reduction in demand, and second, be prepared for the eventual recovery and consequential uptick in orders. While no one knows when and how that will occur, understanding what got us here and how the industry has adapted in the past can help guide the industry. SEPTEMBER 2015 95