Leo's avatar
$1.5m follower assets
The End Of The Shale Revolution
I wrote an article on the (ending) shale revolution, highlighting what it could mean for prices when the oil supply growth engine of the past two decades starts to slow.

This is a part of the article:

  • "The oil price supply growth engine of the world is slowing. Production has rolled over in less-efficient basins, with peak inflation looming in the Texas/New Mexico Permian Basin.
  • ESG initiatives and a deterioration in high-quality drilling locations are set to put tremendous pressure on output in the years ahead, risking an even wider supply gap.
  • Even though global economic demand is slowing down, oil prices are set to refrain from breaking down.
  • While I believe that severe economic weakness could damage energy stocks, I'm a consistent buyer during major corrections, as I believe that higher demand expectations in the future could propel oil prices above triple digits.
  • Needless to say, pitfalls persist. Investors should only buy oil stocks with efficient production, low debt levels, and high production inventory to prevent management from being forced into risky M&A deals to expand production."

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Dissecting the Markets's avatar
I think that economic issues with fracking is what led to the decline in shale production. Fracking helped supercharge oil production but has also greatly reduced the useful life of oil reservoirs and flooded the market with more oil than it could find use for.
Leo's avatar
@dissectmarkets yes, correct



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