Where did all the oil go? Long time passing! A 7.06 million-barrel drop, the seventh drop in a row in a crude adding oil supply drawdown of historic proportions. Record refinery runs operating at 96.7% of their operable capacity last week running 17.6 million barrels of crude oil per day. This comes against a backdrop of a report by Rystad Energy that shows the lowest ever volumes of oil discoveries in 2017 and another report by Energy Consultancy Wood Mackenzie that said investments will fall 7% this year to $37 billion vs. 2016 and will be down 60% from a peak in 2014. The Investor’s Business Daily reported that spending by oil majors is expected to fall 4% and will be focused on deepwater basins in Mexico, Brazil, and Guyana, but drilling is expected to rise slightly.

As I told Gillian Rich at Investor’s Business Daily that “When you get a glut of supply and prices are low, companies pull back because they are starting to lose money,” said Phil Flynn, a senior market analyst at the Price Futures Group. “But they tend to cut back and be too conservative because the perception is that the glut will last forever. Flynn said this happened in 1999 and the early 2000s. He said shale’s kingmaker status might be overdone. Everyone was saying once they get to $60 everyone is going to start investing again but that’s not the case; we are still seeing a pullback in spending. I think that we overestimated shale’s ability to be a global swing producer, being able to raise and lower production at the drop of a hat. Traditional projects take longer to come online but can produce for longer than shale wells.”

Rystad Energy, in their report as reported by Oil Price, said that the low level of discoveries is not an immediate threat to global oil supply, it could become such ten years down the road. In ten years’ time, U.S. shale production may have peaked, at least according to OPEC that sees shale peaking after 2025, although the cartel has conceded that U.S. tight oil has defied previous forecasts and has increased production more than initially expected and will continue to do so in the short term.