LAC - Shale Stagnation Expected After Underpinning Global Supply Growth For Over A Decade
2024-02-23 17:14:01 ET
Summary
- The EIA forecasts near-stagnated US crude oil output for this year and next, potentially leading to significant shortfalls in global supply.
- Without the US shale boom, global crude oil production would have grown by only about 3 mb/d in the past decade and a half.
- Oil prices are up over 11% YTD, indicating a growing awareness of potential supply shortfalls, while the broader market remains bearish.
- If my thesis turns out to be correct, the broader market is likely to see a significant decline, while oil stocks will surge. Lithium miners will also see improved long-term prospects as EVs are an alternative to ICE-powered cars.
Investment thesis: The EIA came out with a notable forecast that the market and the MSM hardly noticed, even though the potential impact on the global oil ( CL1:COM ) market and the global economy perhaps as early as this year could be dramatic. The EIA forecast calls for near-stagnated US crude oil output for this year and next, which does not seem all that dramatic until we add historical context. The context I am referring to is the fact that for the past decade and a half US shale and to a lesser extent Canadian oil sands provided most of the global crude oil supply growth, with shale playing an outsized role....
Shale Stagnation Expected After Underpinning Global Supply Growth For Over A Decade