Energy: Looming U.S. Shale Supply Should Temper Optimism
Huge output decline boosts near-term fundamentals, but lofty prices likely to trigger dangerous shale growth later.
We previously viewed the late 2017 decline in global crude stockpiles as a temporary respite, to be derailed by the shale surge that still looks likely this year. But the precipitous decline in Venezuela’s output has proved far steeper than expected and will most likely prop up oil fundamentals for the rest of 2018. Regardless, oil prices must pare back eventually to prevent catastrophic growth from U.S. shale.
Joe Gemino does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.