This includes a large percentage of super light oil (condensate), which much of the US refining complex, built around processing heavy crudes, has no need for. Hence the concept of exporting it. But we consume around 19.5 million barrels of oil per day. How is that “independent”? While we are all enjoying the lower gasoline prices, I don’t believe they will be around very long. Perhaps just long enough for consumers to load up on trucks and SUVs and crush any notion of an electric car industry.
My take remains the same. US growth in production has been impressive and a nice salve to control world oil prices. I expect that in the next 2-3 years that production peaks and then fades. Perhaps it dies a different death as investors begin to focus on the decline curves of these wells and the lack of a sustainable business model in many cases. Outside of the US, production growth looks non-existent. It seems that Libya, Nigeria, Venezuela, Iraq and a host of other producers are all unsustainable and the world’s spare capacity is not what it is stated to be.
We view last night’s election results as an incremental positive for the oil industry and continue to expect higher oil prices in the long-run.
This article was written by Tim Gramatovich, CFA, CIO and Heather Rupp, CFA, Director of Research for Peritus Asset Management, the sub-advisory firm of the AdvisorShares Peritus High Yield ETF (HYLD).