elmat, i am not forecasting a renewed rise in oil prices anytime soon or even over a long period of time.
when non-opec oil producers in the past could not make meaningful increases or any increases in supply and opec was able to hold a fairly constant supply when world demand for oil was monotonically increasing, opec, the cartel was able to hold a quite high (non-market based, artificial price) price for its supply of oil. however when the usa shale producers reached a huge production supply of oil that caused the world supply of oil to grow so large that world demand and growth of demand of oil could no longer absorb opec's oil at the artificially high prices, the lowest cost producer, saudi, simply said it was going to produce at a market based price. that is what is happening now. depending on what overall product costs are for oil in various countries, we will find out what the steady state market price is going to be. it will take quite a while for this to sort itself out.
on the low borrowing rates you hang your argument from, yes, a lot of shale oil would not have come to market without the misallocation of capital (junk bonds) that the fed's low, low interest rates provided. however i remind you that shale oil drilling and technology development was happening in the usa long before the us fed did quantitative easing. QE simply accelerated the shale technology development and discovery as well as the production build out. some of these shale areas in the usa are still going to be competitive even at these low prices today. i expect the research into shale drilling to continue to drill and produce at lower prices with better oil and ng yields per well.
as for Your wall street consensus view that it is getting to be time for the fed to raise short term rates. i do not agree. you can be sure the fed won't Start raising rates until about 1 year after this chart below bottoms and starts going up meaningfully again. this is how it's been in the past, and this time will be no different. this is both valuable and free information you will find historically to be true -- if you read and comprehended this far.
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