Despite the Gloom, Still a Shale Boom
Oil prices remain weak, despite alarming geopolitical risks with Iran. The key dynamic remains that Iranian and Venezuelan exports have already effectively been zeroed out. US production is growing and Chinese demand growth is flat, so only OPEC-plus production cuts can support prices now. Effectively, since Trump was elected, new US production has satisfied all new global demand growth at the expense of OPEC-plus market share. Media stories about the death of the shale boom are mistaken, as usual. The short-term hiccup in US production is all in the Gulf, due to Hurricane Barry. Shale production is surging – and with high efficiency – especially in the Permian, constrained only by takeaway and export capacity. That is coming on slightly more slowly than expected, but nevertheless still coming on strong.