I believe that energy analysts are absolutely delusional to think Crude production will slow significantly, especially with Oil back near the $60 mark. During the recent, lengthy bull market, tens of billions of Dollars were invested in Crude infrastructure, so there is too much at stake to simply shut down operations and walk away. Investors and participants in any industry that has experienced a 15 year bull market won’t change their beliefs overnight – it takes time for sentiment to shift. Most are far too emotionally and financially vested in the industry, so it’s unreasonable to think that a 9 month decline is going to drive an immediate adjustment to the imbalance in supply and demand.

Granted, Oil will see some immediate production cuts, but these will be temporary in nature. They are not long term oil field closures, but rather decreases (or cessations) in the expansion of wells. Once we see some price recovery – as at present – companies will quickly react and start drilling again. Unfortunately, similar to the Gold bear market, I believe that this is the beginning of a long and arduous grind lower over a number of years.