Morgan Stanley On The Renaissance In American Oil Production

According to Morgan Stanley, oil production in the US is about to increase exponentially, and in new ways that will stabilise the market.

Due to sticker shocker at rising crude oil prices, which have almost doubled in the past three years, companies have been more willing to invest in new technologies using shale that were previously thought of as too expensive.

They expect companies that use new drilling technologies to grow in the next few years, and for the market to stabilise from the benefits of shifting the focus of production from natural gas to oil.

Production of shale is about to increase exponentially:

US Oil Shale Production


Oil rig production has recently passed up natural gas production, and the trend is expected to continue:

US Oil Shale Production


This will lead to a new, less volatile U.S. Oil Cycle:


US Oil Shale Production

As for why America will bet more on oil than natural gas:

  • Oil is easier to transport
  • It loses its value more slowly than natural gas
  • Oil can be stored for future use

The end result of this paradigm shift is a less volatile commodities market.