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The Year We Lost God But Gained OilCoin

Royal Dutch Shell Plc’s CEO Ben Van Beurden was creating a stir of his own by talking about “lower-forever” oil prices. 

: Dec 28, 2017

God didn’t die in 2017, but he did throw his hands up.

Andy Hall, the oil trader blessed with that nickname, caused a stir this summer by closing down his main hedge fund after long arguing for oil prices to rally and reportedly suffering big losses.

Hall didn’t declare oil was dead; indeed, he warned his withdrawal could be a contrarian signal (which turned out to be prescient).

Hall’s capitulation was a warning of a different kind. And while it may be mere coincidence, the appearance of something called OilCoin four months after God bowed out is a fitting coda.

In his letter to investors, Hall said a combination of algorithmic trading and uncertainty about shale-oil output had upended his approach based on fundamentals around supply and demand. Shale was screwing up the supply model and, in the absence of such an anchor, prices swung around on a heady mix of sentiment, positioning and momentum.

He was right about shale oil, sprung upon an unsuspecting market less than a decade ago and defying expectations ever since. Thought just a few years ago to need oil prices north of $70 or $80 a barrel to keep going, U.S. shale output looks like it went up by more than 500,000 barrels a day in 2017, when West Texas Intermediate crude averaged about $51.

OPEC, which has struggled to get its arms around the competitive challenge, recently published a big upgrade to its medium-term projections for North American tight-oil production:

Curve Ball

OPEC’s view on tight-oil production from North America shifted dramatically this year

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnews.net and cybergriping.com are all owned by John Donovan

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