Did The Fed Ignite The "Irresponsibility" Of US Oil Over-Supply?

Saudi Arabian Oil Minister Ali Al Naimi has asked why he should be responsible for cutting output while U.A.E. Energy Minister Suhail Al-Mazrouei said non-OPEC producers should reduce "irresponsible" production. How can that be? How can American production be 'irresponsible' in the land of the free (money). Well, as the following chart from Bloomberg shows, perhaps OPEC members have a point...


As Bloomberg's Chart of the Day shows, crude production in the U.S. increased 75 percent over the past 5 years while output from the Organization of Petroleum Exporting Countries grew 5 percent.

Canada boosted supplies by 42 percent while Brazil pumped 24 percent more, according to data from New York-based Energy Intelligence Group.



“The biggest contributor to the glut has been the rising output in the U.S., which has driven up global supplies,” said Kang Yoo Jin, a commodities analyst in Seoul at NH Investment & Securities Co.

 

“OPEC producers can’t be completely free from taking the blame as they were the ones who let U.S. shale oil players enter the market by limiting supply and keeping oil at $100.”

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However, what we find most intriguing is the inflection point in US production came at a coincidentally (because to claim causality would be ridiculous, right?) crucial time for the Federal Reserve as it went all in on unlimited open-ended money-printing which crashed the cost of funding for any and every project no matter how non-economic through-the-cycle.

Perhaps this post should be re-named "A Fed-Induced Mal-Investment Boom Busts In Real-Time"...