RE:RE:Oil Supply and DemandKensho et al
I attached the chart below to demonstate the delay in US shale output following a rig count increase for North Dakota. The delay of 18 months is typical. That is, if the rig count miraculously went back up to 1,600 for oil next week, it would be late 2017 before US shale ouput reached the highs of 2015. Given that:
1. Embattled rig providers will have a lot of time consuming maintenance and refurbishment to do on downed rigs before they can be redeployed, then there are the crews, many of whom will not be returning.
2. Shale producers and their creditors have suffered severe fninacial stress and will struggle to raise the finance for a rapid ramp up in rig deployment.
3. The low oil prices are here for years theme has deep roots in the sector - I really don't know why - producers will wait a while, will wait too long before being conviced of a sustained oil price recovery.
US shale output will struggle to reach 2015 levels by the end of 2018, more likely 2019.
Also, the Saudi's can't pump much harder, to avoid a signifcant production shortfall over the summer they will have to increase production to their limit.
