Critical US Fracking Equipment Shortages Mean Higher Oil Prices In 2018

The primary bear thesis on oil currently is that U.S. shale is a new global swing producer, capable of rapidly responding to price and inventory changes to ensure market balance. This thesis, however, is fatally flawed as evidenced by flat-lining Texas and New Mexico production (the two key shale states), and an increase in drilled-but-uncompleted wells. This is despite the fact that OECD inventories have fallen 44% versus the 5-year average as of July, and prices have averaged $49.50 YTD.

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