Oil markets took off like a rocket in January 2018 and oil prices blew past the $60/barrel level and were headed much higher. Analysts were talking about oil in the $70/barrel range or higher. Suddenly, the frackers came back to life and wells were being drilled at a rapid pace in all of the major shale oil-producing areas in the U.S. Players in the oil patch were ready to party like it was 2012! But we warned readers that this blip was likely to be short-lived and the fundamental economics of oil were still deflationary. We pointed out that Russia and Saudi Arabia would support higher prices only to the point where fracking came back into play in a big way. Once that point was reached, it would be in the interests of Russia and Saudi Arabia to put a lid on prices, as they did in 2014, in order to bring the frackers to heel. As this article reports, the situation is more dangerous for everyone. Russia and Saudi Arabia both need as much oil revenue as they can grab. But the frackers have done a great job at lowering their costs of production. Frackers who produced in the $70–130/barrel range in 2014 now produce in the $30–40/barrel range. This is due in part to further improvements in hydraulic fracturing and horizontal drilling technology, but also to the fact that “new” frackers bought equipment, leases and reserves from “old” frackers for pennies on the dollar when the old frackers hit the wall in 2015. The result now is an oil global glut with no end in sight. The frackers are eating OPEC’s lunch. That won’t last. OPEC (really Russia and Saudi Arabia) will retaliate by opening the spigots again to take market share from the frackers. But this time the breakeven point won’t be $60/barrel; it will be more like $40/barrel. This new reality in the oil patch is a huge counternarrative to the increased “inflationary expectations” that have been roiling the stock and bond markets lately. Get ready for lower oil prices and more Fed ease (in the form of rate cut “pauses” and “forward guidance”) later this year.