the Call on Shale articleInteresting article in the May15th OGFG (Oil and Gas Financial Journal) entitled, "The Call on Shale." If you can google the publication it's worth a read. I get it sent to my e-mail address free, so you should have no difficulty either. From the day to day gyrations in the oil market it’s well-nigh impossible to establish any clear direction in price. But this article suggests in the long term there is a trend, and it is up! Given the precipitous decline in global exploration activity it will be a challenge for the global energy industry to meet the anticipated supply in 2019 and the tightening market leading up to it in the latter half of 2018. It goes a long way to explain why the drillers are coming back gangbusters in U.S. in spite of $50.00 oil because they are looking well beyond. When you consider the number of shale wells needed to be drilled to meet the demand crunch in 2019 (mentioned in the article) the rig count right now is essentially just a whisper of what is yet to come.
But you must view this report in tandem with the OPEC/Russian initiative to restrict supply. There is every indication it will be passed at the OPEC meeting later this month. It's nice to have them finally working for us. It could mean that in North America we will see green shoots even earlier. P.S. And Western Canadian Select will benefit too.
When OPEC pushed supply into the markets after Nov. 2014 it drove prices down and strangled shale production, but equally important, a substantial portion of that cheap oil went into inventories around the world wherever countries had the facilities to store it. I mean all inventories, including strategic ones like you would see in China and India etc. You rarely get an opportunity to buy oil at $26.00 a barrel. This was the price paid for the attempt to strangle shale. OPEC and the Russians are mindful of this fact because nothing forestalls a rally like ample inventories. So this move to restrict supply is aimed at trimming those inventories!!!
There is no way IMO the Saudis or the Russians can annihilate North American oil an NG production going forward and this is good news. I hope I'm right. GLTA.
Fergus2
P.S. Great interview stem to stern with Rosenberg a couple of days ago on bnn.ca. But of particular interest (near the end) he suggested that one should consider getting into to energy stocks based on the OPEC/Russian news. Good advice.