By Russell Clark, author of the Capital Flows and Asset Markets substack
For the last 8 years or so, shorting oil on any sign of recession in either the US or China has been a good trade. Hence I can understand the temptation to see the inverted yield curve, or weakening activity in China and US as signs to get short oil. There are however some big problems with a bearish oil view here.
From 2013 onwards US shale drillers were engaged in a manic rush to drill wells, leading not to only fast growth in US energy production, but a sizable inventory of Drilled, Uncompleted (DUC) wells. Today, that inventory of wells is still falling.
Shale drilling tends to produce more gas