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Case For A Crude Oil Boomerang

The story didn't get much attention when Bloomberg broke it Monday afternoon last week, but now it seems to have hit all the big majors, including CNN Money as late as today. OPEC's Secretary General Abdulla al-Badri said oil could return to $200 per barrel. Harold Hamm, Continental Resources (CLR) CEO was also quoted last week saying oil could at least top $100 soon, for the same reason: Shale depletion curves will eventually catch up with falling investment in new production. When that happens, there will be a supply shortage.

What's been missing from the media's coverage is the connection of why this is happening, and precisely why Mr. al-Badri was allowed to make such a claim. After all, why would OPEC let its top administrator jawbone public commentary like that, especially now?

First, the headline: Shale wells decline quickly. In the industry, we typically project no more than a… Read More …