A Story of Oil: Production ⬆️📈🚀 | Stocks ⬇️📉🚨
Energy sector funds are performing terribly in the last few years, but it counterintuitively reflects US energy "dominance"
U.S. energy production growth has been outrageous in the last decade. Natural gas and oil production surged +53% since 2011 (on a total BTU basis), the U.S. has been the world’s largest producer (and consumer) for several years now. The 4-week average of oil production reached record high levels more than 20 times in the last couple years. The Energy Information Administration (EIA) put it delicately:
United States produces more crude oil than any country, ever
However, price performance of the oil/gas services ETF (XES) during this period has been abysmal. The basic story of what’s happening is very econ 101: excess oil supply reduced prices and lower prices reduced margins for oil services companies. Still skeptical?
This chart lines up all three stories (along with other relevant events in global energy dynamics): Oil Services ETF ⬇️⬇️⬇️ (top panel); oil production ⬆️⬆️⬆️(middle panel); oil prices ⬇️⬆️➡️ (lower panel).
