Taps Coogan – January 12th, 2021
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Art Berman, geologist and energy analyst, recently spoke Macro Voice’s Erik Townsend about the outlook for US oil production and global oil markets in light of the sharp decline in the rig count and capital spending deployed by the energy sector in 2020. Mr. Berman is expecting larger than anticipated declines in US oil production and higher prices in 2021, as he details in the somewhat technical discussion below.
We discussed US shale oil production in depth right before the pandemic exploded onto the scene last year. The pandemic and political outcomes this year have accelerated the issues facing the US shale sector by taking more rigs out of the field, suppressing demand, and scaring capital out of the sector. Mr. Berman expects US oil production to fall to roughly 9 million barrels a day by the end of 2021 compared to 12.7 million prior to Covid. That corresponds to a roughly 4% reduction of pre-pandemic global production just from the US.
Whether that proves bullish for oil prices will, of course, depend on how quickly demand comes back this year.
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