Andy Hall, who is known as God in the oil markets, says the increased production from shale is temporary (via the FT):

The trader told investors in his $4.5bn Astenbeck hedge fund, which he runs alongside the Phibro commodity trading house, that while output from shale oil wells is initially prolific, production declines rapidly because each well only taps a single pool of rock-trapped oil, rather than an entire reservoir.

In a letter to investors seen by the Financial Times, Mr Hall said that makes it "impossible to maintain production . . . without constant new wells being drilled [which would] require high oil prices".

If you want to know what will happen to the oil market from shale drilling, I think you could do worse than to look at what it did to the natural gas market. The boom in drilling eventually reduced prices to the point where it no longer made sense to drill new wells. Obviously, we aren't there yet with the oil market but inventories are not exactly lean right now. When the drilling slowed down sufficiently to reduce new supplies, nat gas recovered rapidly. It is certainly hard to bet against God, but my guess is that prices will have to fall first before another run higher. How low is hard to say but the estimates I've seen are that shale production in most areas is not profitable below about $65. That's a long way down from here but certainly not out of the question with the global economy in a soft patch.

I would also add that a lot of the shale boom in places like ND would never have happened without the sustained drop in the value of the dollar over the last decade. If the dollar is really starting a bull run here, oil - and most other commodities - are going to take a hit. I'm a little skeptical of the dollar rally but it does seem to be the best of a bad bunch of choices in the currency arena. The Aussie and Canadian dollars have been taking a hit on the China slowdown and Europe needs a cheaper Euro so the US dollar may win by default. Sorry God, but I think I'd rather be on the other side of that long oil trade right now.