Summary: Despite an uptick in the oil price this week, the current downturn is different as there is no guarantee US unconventional producers will be quickly forced out. It appears that OPEC has resorted to flooding the market with cheap oil without knowing what will happen to US shale output. Meanwhile, there is financial pressure on non-OPEC members such as Russia, which must keep producing to balance its budget.
Key take-out: US shale production will force OPEC – and investors in ASX-listed oil stocks – to live with a lower oil price for longer. It could be a very long time before the oil price returns to $US100 a barrel.