There may be shale producers pumping all the way down to $35, but that is only to stay cash flow positive (for a few). It does not even come close to paying down massive amounts of debt that it has taken to build their infrastructure (and I am not even talking about all the bonds sold by municipalities to expand their sewer, water, and road system's, and fire departments). There is also a cost to stopping production on a well, and if it is inactive for a certain amount of time, it has to be abandoned, which is even more expensive. Great series Raoul!!!

Shale oil cost of production is falling due to a depression in oil and gas services. Technology is improving, but based ob what I am hearing about 80% of the cost of production cuts are due to services companies dropping their prices. If there is another drop in oil prices, will the oil services companies discount further or go bust?

This was very interesting but unless the "average" marginal cost of production for oil is less than $50, the industry is bankrupt. I don't dispute that there may be some shale producers that can be profitable at $35 but on average, globally, this industry is headed for bankruptcy at these prices. Demand is going up and eventually the removal of nearly half a trillion dollars of capex will eventually be fully realized. I have a client who sold nearly 4000 cars last year and only one was electric. That might be different 10 years from now but for the time being, gas powered cars rule the day. I agree wth many of the assertions made here but totally disagree on the timing...oil will be over $70 by 2018 because inventory draw downs will continue to surprise to the upside.

The shift in the transportation complex which is ~35% of total demand has profound medium term impact. For example the compounding of fuel efficient gains which run circa 3.5% p.a implies after 5y an immutable reduction of 7% in total demand.

Great st uff Raoul! Perhaps a couple of charts on demand, stockpiles etc. Exactly why I'm here!

There is very good data available from North Dakota State Government. The archive is available all the way back to 2010. https://www.dmr.nd.gov/oilgas/directorscut/directorscutarchive.asp May 2017 data below Oil Production February 28,958,939 barrels = 1,034,248 barrels/day March 31,794,769 barrels = 1,025,638 barrels/day(preliminary) (all-time high was Dec 2014 at 1,227,483 barrels/day) ND Sweet Crude Price February $42.74/barrel March $38.13/barrel April $39.86/barrel Today $38.50/barrel (all-time high was $136.29 7/3/2008) Rig Count February 39 March 46 April 50 Today’s rig count is 51 (all-time high was 218 on 5/29/2012)

Great stuff and love the segmented roll out as well as getting the valuable input from other experts specializing in parts of the market, e.g., shipping, shale and shale finance, Saudi, and consumption patterns/trends all in one Trade and the derivative trades that will flow from this major one. Excellent creative work guys.

I retract my TBC comment! Sorry!