Friday, November 14, 2014

Great post on LinkedIn " US shale stays strong despite low oil prices" by Cecilia Rehn

US shale stays strong despite low oil prices 

Interesting discussion on the affection of shale oil on the global market and the response by OPEC.

Here are two quotes that I found most interesting: 
  • Analysts at Rystad Energy recently predicted that oil prices could fall as low as US$ 60-65/bbl, and the North American shale output in 2015 would maintain expected exit-2014 levels of 6.4 million bpd.
  • Indeed, Bob McNally, Head of consultancy Rapidan Group, commented recently that “Riyadh sees less of a need to act as a swing supplier in a weak market…[Saudis believe] shale producers are a blessing, as they put a ceiling on the price as well as a floor.”
A lot of nations don't have as low break-even prices as the US with shale oil. So it will be interesting to see how this plays out in the global economy. For now, I am enjoying filling my gas tank at less than $3 a gallon - but I have read differing forecasts on the price of gas in the US. However, they most have been between $2.92 & $3.05 over the next 12 months.  But I do wonder - how long is that sustainable? How will the low oil prices affect industries & economies? 
And most importantly, when will a new technology appear and disrupt the exploration, extraction, and production of oil? If history has taught us anything, it is that industry is constantly disrupted with breakthrough technology. Where in the supply chain with that disruptive technology appear, and what affect will it have on everyone.

What are your thoughts?