Reader Sends Link Regarding Crude Oil's Recent Sawtooth Price Pattern -- April 30, 2015

A reader over at the Discussion Group sent this link; nice article. An excerpt:

On a go forward basis, the reason for price excursions will be real changes in shale oil production together with speculative beliefs in this regard. I have asserted in previous posts that the US has unwittingly become the swing producer, meaning when it sneezes world oil catches a cold. The Saudis used to have this status together with OPEC determinism of oil supply.

Recently Boone Pickens shared a stage with former EPA head Carol Browner and ex-secretary of energy, Steve Chu, discussing the environmental safety of shale oil and gas production; no doubt the debate was entertaining. Associated with this occasion Pickens stated to the press that the US was responsible for the oil price crash, not the Saudis. While this is not exactly news to at least readers of my posts, I cannot recollect a causal link being suggested by any person vested with expertise.

Most of the press has been on why the Saudis did it, rather than whether they did it. Damaging US shale oil production and hurting the economy of Iran and weakening Syria’s Assad (the latter through impoverishing financier Russia) were the principal theories advanced. Assuming the validity of Pickens’ assertion, one can conclude that if US production brought the price of oil down, then reduction in the same would send it back up. One theory of Saudi motivation would be supported.