There have been great matchups in the world. You had Alien versus Predator. You had King Kong versus Godzilla. But no matchup in recent memory might prove to be as interesting as Trump versus OPEC. OPEC still stunned and angry about President Donald Trump waivers on Iranian oil exports was moving in on a deal to cut production by at least 1.4 million barrels a day. The President called out OPEC and tweeted that “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” causing oil to give up its gains, that were already tenuous, with a soaring U.S. dollar that hit its highest level since June and a faltering stock market. This epic battle helped oil crash yet again, setting a record for consecutive down days and raising concerns about what this says about the state of the global economy and the impact on U.S. oil producers. Will OPEC give in to the President’s tweet and back off a production cut or will they defy the President and send him a signal that he does not own OPEC? Let the battle begin.

U.S. oil producers can’t be too happy with President Trump’s tweets. While the President realizes that low oil prices are good for the economy, too low of a price may hurt U.S. economic growth. The U.S. energy industry is a big part of the U.S. economy and the world is really looking to us to supply the globe over the next few years.

In fact, in today’s report from the International Energy Agency(IEA), the IEA said its main projection scenario through to 2040 foresees the U.S. accounting for nearly 75% and 40% of global oil and gas growth, respectively, over the next six years. Growth is expected to be driven primarily by shale fracking, which should lead U.S. shale oil supply to more than double, reaching 9.2 million barrels a day by the mid-2020s. “The shale revolution continues to shake up oil and gas supply, enabling the U.S. to pull away from the rest of the field as the world’s largest oil and gas producer,” said the Paris-based organization that advises governments and corporations on energy trends. “By 2025, nearly every fifth barrel of oil and every fourth cubic meter of gas in the world come from the United States.” As reported by the Wall Street Journal.

Reuters reports that “ Electric vehicles and more efficient fuel technology will cut transportation demand for oil by 2040 more than previously expected, but the world may still face a supply crunch without enough investment in new production”, the International Energy Agency (IEA) said on Tuesday.  This comes as the IEA says that U.S. shale oil production is expected to plateau in the mid-2020s, the IEA said in its central outlook scenario, ultimately falling by 1.5 million barrels a day in the 2030s as a result of resource constraints. After 2025, the report noted, the “baton gradually passes to OPEC to meet continued—albeit slowing—growth in global oil demand.”

Whatever, this run on the bank in oil is either signaling some ominous warning signs about the global economy or it is the buy of the decade? Stock market concerns about Brexit and the potential for slowing global growth is creating the illusion of a supply glut that currently really does not exist. In fact, global inventories have been tightening, floating storage in oil is at 10-year lows and demand numbers for oil continue to be strong. Yet the market is betting big that a slowdown is ahead even if it is not here now. If that’s the case OPEC had better cut, or they will go down economically and bring the U.S. shale oil down with them. On the other hand, if this is all based on fear then a cut will leave us undersupplied as we head into winter. This is going to be epic either way.

Natural gas can’t ignore winter. It was 17 degrees when I left my house this morning and now I remember what that wind-chill thing is all about. Natural gas bulls got a chill of excitement as demand is surging along with the price. Storage levels are 16.2% below the five-year average and this early blast of cold is going to mean record demand, leaving storage in a more vulnerable state as we go forward.

Bottom line we believe that the oil market is going down beyond ridiculous but it’s hard to catch that falling knife. We know that this price crash will have ramifications on the production side that needs higher prices to keep expanding. The IMF was counting on higher oil prices to help economies in the Gulf States. How is that going for them today?