HAVE YOU HUGGED A FRACKER TODAY? Even When OPEC Wins, It Loses.
In August, for the first time in four months, OPEC finally managed to follow through on its promises when its production fell from the previous month’s totals. The drop was modest—just 79,000 barrels per day—and it was driven in large part by Libya’s continued struggles to get its output back online, but starting the slide in production is an accomplishment. 79,000 bpd won’t cut it, but on the demand side there’s more working in the favor of a rebalanced market, as OPEC expects oil demand will increase by more than previously expected in 2018.
However OPEC may be like the dog chasing the car, not sure what it would do if it ever caught it: if prices do rise with any real significance as a result of the cartel’s actions, it will be American shale producers, not petrostates, that will be quickest to pounce. Fracking occurs on a smaller scale, and it’s easier to ramp up (or down, as the case may be) as a result of global prices. And U.S. suppliers aren’t just capable of seizing the opportunity for a rebound, they’re chomping at the bit—low oil prices have put a significant dent in the shale boom, and there’s already a backlog (or “fracklog”) of drilled but not yet completed wells just waiting for the economics to change.