The number of active oil drilling rigs, particularly in the US, has fallen sharply since the start of the year because of lower crude prices, which could have implications for metals demand.
The active US oil rig count fell for the 12th straight week to 986 last week, putting it below 1,000 for the first time since June 2011, according to data compiled by oil services firm Baker Hughes.
The number of active oil rigs in the US has fallen sharply from 1,609 in mid-October, with 237 taken out of operation in February alone, spurred by the drop in oil prices. The front-month WTI contract fell below $45/bl at the end of January, from as high as $107/bl in June last year.
Brent crude prices fell below $47/bl in mid-January, down from $115/bl in June. And the international oil rig count outside North America fell to 982 in January from 1,036 in December and 1,080 in July, the Baker Hughes data show.
The number of active natural gas rigs has also fallen, to 280 in the US at the end of February from as many as 356 in November, and to 244 outside North America in January from 264 in July.
Drilling equipment in the oil and gas industry contains alloys that use a number of minor metals, including tungsten, molybdenum, titanium, chromium, vanadium, zirconium and niobium. A fall in drilling activity, if sustained, would result in lower demand for such equipment. The oil and gas sector accounts for at least 10pc of total tungsten consumption.
nw/sp/wj
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