oil OPEC

Chart Check (“The Road To Nowhere”)

Walking up the down escalator...

Recall how I'm always talking about the futility of US oil production. Here's how the dynamic works (or, more appropriately, "doesn't work"): prices rise capex and production ramps up as plays become economic again market becomes oversupplied prices plunge outspend (i.e. funding gaps) are plugged with debt, revolvers, and equity offerings producers live to pump another day thanks to wide open capital markets (i.e. investors' hunt for yield) prices rise rinse and repeat Or, visually: Well, for those interested in the exact point at which US producers embark on "step 2" from the numbered list shown above, here's a simple chart from BofAML: (BofAML)
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2 comments on “Chart Check (“The Road To Nowhere”)

  1. Curt Tyner says:

    What these guys are hoping for is a nice little disruption (war) to get back on track! Call me a cynic, the writing is on the wall. Where is Pink Floyd when you need a brick.

  2. […] In other words, it’s like walking up the down escalator (for a fun visualization, see here). […]

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