Natural gas is still the main driver for drilling activity in the United States, but oil-directed activity has begun to pick up for the first time since U.S. drilling activity turned around 16 months ago. Outside North America, drilling continues to improve slowly, and activity remains at low levels. Weak international drilling continues to put downward pressure on pricing for some oil field products and drilling services. For instance, offshore activity in the Gulf of Mexico is very strong, but excess international capacity in drilling rigs is keeping rental rates on rigs at relatively low levels. Agriculture Rain in June helped many areas, but high temperatures in July dried out fields and pastures and left some herds heat-stressed.
Contacts say cattle prices have been high and the outlook for livestock producers is positive.
Crops were mostly in good shape but some were showing signs of lack of moisture and heat stress. Production costs are again expected to exceed prices received for many crop producers, partly a result of high fuel prices but also low crop prices. Some crop producers would not have turned a profit last year without generous 1999 government payments and are looking for emergency assistance again this year. To comment on this site, please fill out our feedback form.