OIL WARS: Shale Output Hasn’t Grown This Fast Since Oil Was at $100.
The situation is “reminiscent of the first wave of U.S. shale growth,” when a flood of American oil built up a global glut that sent prices crashing over four years ago, said the Paris-based IEA, which advises governments and corporations on energy trends.
Oil prices fell after the report’s release in Europe before recovering somewhat. Brent, the international benchmark was down 0.06% at $62.55 while U.S. prices were down 0.27% at $59.13.
Shale producers “cut costs dramatically” during the nearly three-year-long oil industry downturn, the IEA said. They then took advantage of the Organization of the Petroleum Exporting Countries cartel’s decision to cut its own output, which helped prices rise from the low $40s to over $70 a barrel as recently as late last month.
“All the indicators that suggest continued fast growth in the U.S. are in perfect alignment,” the IEA said.
OPEC had a choice between price and market share, and they sacrificed market share to prop up prices. Now they’ll get neither.