Opec's worst fear comes true as US 'energy dominance' draws closer

Surging output of US shale oil has again pushed the oil market into surplus. Production has risen by 1.3 million b/d over the last year, close to matching the growth in demand from China, India, and the rest of the world in 2018. This means OPEC and Russia will have to support  production cuts of 1.8m b/d and a shale-driven slump that keeps cutting short the normal petroleum cycle. Fast rising production in non-Opec countries is likely to grow by more than demand. The IEA said the price rally has stalled as US output, in the three months to November, crude output increased by 846,000 b/d, and will soon overtake that of Saudi Arabia. By the end of this year, it might also overtake Russia to become the global leader.  America’s frackers have been able to halve costs since the peak of the last bubble with a mix of ‘multi-pad’ sites, longer lateral bores, and precision drilling with ‘smart bits’ linked to computers. Most can flourish in a price band from $45 to $55, with the best locations in the Permian Basin of West Texas closer to $25. Output is growing as fast today as it was when oil was trading at over $100.