Resilient Shale Producers Get Their Second Wind
But the world economy is weak, at best.
"Oil prices creeped above $50 per barrel recently, and already we’re seeing encouraging signs in the American shale industry. Fracking shale rock is a relatively expensive process, so when crude prices tumbled from a high of more than $110 per barrel two years ago to a nadir of under $28 per barrel this past January, America’s oil output correspondingly flagged as companies were forced to halt production, awaiting an uptick in the market. Thanks to supply disruptions abroad that have helped to ease the glut that precipitated oil’s price collapse, the market has somewhat rebounded, and as the FT reports U.S. companies are taking advantage . . ."
US shale oil producers will jump in as the price rises, again depressing the price. In addition, these producers are trying to find ways to produce this oil at much lower prices than they have in the past. One thing Americans are really good at is innovation, expect shale oil production costs to continue to drop. As this happens, the price of oil will continue to drop since American producers are quite consistent in part due to the stability of the country.
In addition, we are seeing some renewed fracking interest in Britain and some other European countries.
OPEC is predicting demand jump in the second half of the year. I don't see it with China showing more problems, the US peak oil use is summer, and we are not showing all that much right now. Plus, if the economic indicators are accurate, it appears we are closer to world recession then world growth. We will know more in six months, but I don't see anything like what OPEC sees.