Adam Rozencwajg told FS Insider listeners last week shale productivity growth has started to decline and that this will be “the most important story” of 2020.
Here’s what he had to say when we spoke with him on Thursday:
“All the attention and headlines right now are focused on Iran and geopolitics and certainly that’s important but something much, much more critical to the global oil markets has happened over the last five to six months and that is the slowing of US shale. Shale oil has been the only bright spot in global oil supply growth over the last decade…but now you’re starting to see shale production really begin to slow…
For the first 10 months of the year in 2019—which is what we have updated data for—shale growth has slowed 60% year on year. So, it’s still growing, but its growing well off of its pace for the first 10 months of the year in 2018 and I think that’s going to be the most important story as we progress through 2020.”
Adam talked about what he believes this means for oil prices in 2020, and also gave listeners an important update on commodities like copper, gold, uranium, natural gas, and agricultural commodities.
Here are some of Adam’s remarks regarding long-term copper demand from electric vehicles and renewable energy:
“The average electric vehicle consumes substantially more copper than an internal combustion engine. Another major source of potential copper demand growth going forward will come from renewable energy resources, which is even more dramatic than the uptick in going from an internal combustion engine to an EV as going from, let’s say, a coal plant to a renewable plant…
To the extent that we are as a society trying to push additional renewable projects forward, those projects require a huge amount of copper compared to more traditional sources of electricity generation.”
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