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Saudi Arabia and Iran may yet come to terms on some sort of production arrangement, but the outcome of the negotiations in Algeria this week may not do much to rescue oil prices. Following the media spectacle, the oil markets may have to shift their attention back to the supply and demand fundamentals, which are not reassuring.
The late-2014, Saudi-initiated oil-price war may have taken the 'boom' out of the US shale industry as it seriously threatened OPEC market share, but Saudi victory has been elusive: US shale has proven amazingly resilient. The industry has adapted quickly to the new playing field, and the unsung hero of a new uptick in drilling and investment isn't just true grit—it's sand.
Oilfield services, shipbuilders and other industries that rose with the pre-2014 oil price boom have had it hard. Since barrel rates fell, their previous patrons have become uninterested in doling out major purchase orders, leaving oil and gas equipment manufacturers without revenues.
The collapse of oil prices has ground shale drilling to a halt, but the one region where drilling is still active, and even increasing, is in West Texas.
We have gone electric, and there is no going back at this point. Lithium is our new fuel, but like fossil fuels, the reserves we are currently tapping into are finite—and that is what investors can take to the bank.
You may think lithium got too popular too fast. You may suspect electric vehicles are too much buzz and not enough real future. You may, in short, be a lithium skeptic, one of many. Yet, despite this skepticism, lithium demand is rising steadily and sharply, and indications that a shortage may be looming are very real.
It's possible that OPEC is crying wolf with hints of an output freeze next month in Algiers; but it's also possible that they are ramping up production to take the sting out of a freeze. This is a delicate balancing act that the Saudis need to play very carefully.
The official chatter is that the OPEC meeting in Algeria from September 26 to 28 could conclude with an agreement to freeze production by the member nations, with even Russia joining forces in a freeze that may prevent further oil price erosion.
Saudi Arabia suggests it may be increasing its August crude output to a new all-time high as it could give it more leverage to influence the September informal talks on a possible production freeze, Reuters reported on Wednesday, citing industry sources.
The U.S. electric power sector burned through a record amount of natural gas in recent weeks, a sign of the shifting power generation mix and also a signal that natural gas supplies could get tighter than many analysts had previously expected.
Another oil price downturn threatens to deepen the plunging levels of investment in upstream oil and gas production, which could create a more acute price spike in the years ahead.
Oil and gas companies have gutted their capex budgets, necessary moves as drillers went deep into the red following the crash in oil prices. However, the sharp cutback in investment means that huge volumes of oil that would have otherwise come online in five or ten years now will remain on the sidelines.
What killed the dinosaurs? It's a question as old as – well the dinosaurs themselves, and one that everyone from schoolchildren to scientists have been asking for decades. Movies like Jurassic Park and the Land Before Time only heighten that sense of wonder and raise the stakes behind that question. Now according to a new scientific study, it seems that black gold may have been the source of the dinos' demise.
So far, lithium has been the hottest metal of 2016, beating out gold, with exponential demand expected over the coming years. Although the price trajectory of the metal has been subdued in recent months, the fundamentals behind the long-term trajectory suggest strong potential for long-term growth.
Price doubling from 2014/2015 was first seen in China and is now being felt worldwide, with lithium hydroxide prices from $16-20 and carbonate prices from $12-14 thousand USD per ton.
The rig count has rebounded from the lows seen in late May; a small indication that oil companies in the U.S. could begin drilling anew. Shale drilling is a short-cycle prospect, requiring only a few weeks to drill and bring a well online. Because of this, the collective U.S. shale industry has been likened to the new "swing producer": low oil prices force quick cutbacks but higher prices trigger new supplies. In essence, shale could balance the market in the way OPEC used to.