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The Motley Fool
A Texas-Sized Surge in Oil Production Will Hold Prices Down
New pipeline capacity, a massive backlog of uncompleted wells, and increased drilling activity together set the stage for the next leg of growth in U.S. oil production.
Adam Levine-Weinberg (TMFGemHunter) Nov 11, 2018 at 7:25AM
In the span of five weeks, a roaring bull market for oil has given way to a sharp downturn. Fears that U.S. sanctions on Iran would cause a global oil shortage have been replaced with worries that the market is oversupplied. Prices for both WTI and Brent crude -- the U.S. and international benchmarks, respectively -- have plunged about 20% since early October.
Rising U.S. output played a big role in popping the recent oil price bubble. Some oil-producing countries are now considering production cuts to reverse the recent drop in oil prices.
In the short term, production cuts by OPEC and its allies could drive up prices. But in the long run, any such moves would be self-defeating. U.S. oil production is primed to keep skyrocketing -- and the higher oil prices go in the short term, the bigger the jump in U.S. output will be.
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