Recently on CNBC, I discussed technological disruption in the auto industry from car sharing, autonomy and electric vehicles. I argued that batteries were likely to be similar to microchips – falling 20% in price every year – and could therefore disrupt the internal combustion engine.
Oil price spikes have contributed to almost all US recessions since 1950. But with the US shale revolution, most investors are more concerned with how low oil prices could go. Ultimately, OPEC will decide the answer to that question. Our analysis suggests OPEC will continue to limit production when necessary, with the aim of generally keeping prices between $45-$55 outside of recessions and significant new supply disruptions.
Rocketing rig counts mean US production could surprise to the upside, with record shale production levels likely by 2018. This could threaten the anticipated crude market rebalancing and has been a major factor behind our negative view on oil prices since late 2016.