Thursday, January 28, 2021

Gloomy outlook for shale oile

For oil analysts and advisers Goehring & Rozencwajg the prospects for oil and especially shale oil will be murky in the forseeable future:


We believe we are on the cusp of a global energy crisis. Like most crises, the fundamental causes for this crisis have been brewing for several years but have lacked a catalyst to bring them to the attention of the public or to the average investor. The looming energy crisis is rooted in the underlying depletion of the US shales along with the chronic disappointments in non-OPEC supply in the rest of the world. The catalyst is the coronavirus.

The initial phase of the crisis that took prices negative is behind us and the next phase which, should take prices much higher, is in its infancy. Global energy markets in general, and oil markets in particular, are slipping into a structural deficit as we speak. We believe energy will be the most important investment theme of the next several years and the biggest unintended consequence of the coronavirus.

 

Investors’ focus has shifted to how quickly supply can be brought back to meet recovering demand. While most investors believe the lost production will be easily brought back online, our models tell us something vastly different. While OPEC+ production will likely rebound, non-OPEC+ supply will be extremely challenged. Instead of recovering, our models tell us that non-OPEC+ production is about to decline dramatically from today’s already low levels.

 

You can read the rest of the piece via the below link:


http://blog.gorozen.com/blog/setting-the-stage-for-an-oil-crisis

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