CHART OF THE WEEK
Down 78%. That is by how much the mining industry’s capital goods orders collapsed between November and December 2015. The figure illustrates the extent of the ongoing adjustments in the US oil sector. Investment in the mining industry made up less than 3% of Q4 2015 non-residential investment, having represented up to 6.9% in 2012.
Given shale gas wells have a far shorter lifespan than conventional wells, the impact of this collapse should soon affect US oil production, and start to offset the supply glut that is currently a key feature of the global market (see Chart of the Week “Oil prices dip below USD 40 a barrel”).
However, in the short term, oil inventories are rising steeply again, creating a risk for oil prices.
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