This Could Be The Beginning Of A Tremendous Oil Rally

May 6, 2020: This Could Be The Beginning Of A Tremendous Oil Rally

If you’re a fan of oil, and I expect you are seeing as how you’re reading articles on OilPrice, get ready for a positive forecast about oil prices moving higher. You’re going to like the direction this article takes. Oil prices are getting ready to rise…dramatically. We are going to move from a perception of severe surplus due to the global economic slowdown, to a reality of intermittent and localized shortages. This will be strongly evident by the 4th quarter of this year. Let me set the stage for this prediction.

In a recent OilPrice article I put forth a fairly bold theory about where the Super Majors might turn to replace lost shale production, given the oilfield, “tent-folding,” that’s underway now. To substantiate this theory I relied upon some logic based on my 40-years of experience in this business, and some general trends published by Rystad regarding the effects of underinvestment in a certain segment of the market. I now have some hard data which I will share in this article.

The market segment to which I refer is, of course, deepwater. Unloved and cast aside the last 6-8 years for hyper-investment in U.S. shale. The shale merry-go-round funded by cheap money and easy credit, fueled our production growth to new heights over the last decade. Read more