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Leonid Bershidsky

Time Is Running Out on U.S. Frackers

While a U.S. oil production decline is inevitable, most of the industry will survive a harsh 2016.

The U.S. shale oil industry is in retreat, but it will largely survive next year, and its production decline will not be catastrophic enough for oil prices to shoot up. Scarier things probably await U.S. frackers in 2017.

Saudi Arabia's price war on the U.S. producers began a year ago, and the shale producers held out as well as they could for most of it, running on bravado, cost-cutting, borrowing and previously bought hedges. By now, all these resources are mostly exhausted for the smaller players.