The OPEC shale fantasy

Fuel Fix:
The Organization of Petroleum Exporting Countries believes U.S. oil production is set to drop by 150,000 barrels a day in the second half of 2016, one of the main factors behind a long-anticipated easing of the global oil glut over the next few months.

That drop in the nation’s output will come, OPEC said in its monthly oil market report, from the shale plays at the center of the U.S. energy boom a few years ago. Declines in those regions, including in South Texas, will overwhelm rising output from the Gulf of Mexico. A recent decrease in the price of U.S. oil stocks shows the market is realigning supplies with demand, the cartel said.
If there is demand for oil in the US it is likely to be filled by US shale producers. They are also better positioned to increase production than offshore producers.  The global oil glut comes from the fact that there is less need for importing OPEC oil.  If OPEC continues to try to push the shale producers out of business it will be putting a permanent ceiling on its own price of oil.  That is forcing OPEC countries to eat through their reserves or worse in the case of Venezuela.


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