Despite "drill baby drill," oil production seen to drop slightly
The Energy Department used a classic "Simpsons" meme Saturday to promote"drill, baby, drill" — but new analysis shows the challenge of making it stick outside of Springfield.
The latest: U.S. crude production should drop slightly next year, S&P Global Commodity Insights said Monday.
The firm also revised its global demand growth estimate down sharply.
Why it matters: The production forecast — in S&P's first such outlook since the April 2 tariff rollout — would be the first year-over-year U.S. decline in roughly a decade aside from the 2020 COVID crisis.
Yes, the dip it envisions is pretty small and would follow modest growth this year.
But it's nonetheless a shift at a time when President Trump is vowing to "unleash" U.S. energy.
The intrigue: It's all fluid! Crude prices jumped Monday morning on news U.S. and China will slash their tariffs on each other for 90 days.
The U.S. benchmark WTI gained 4%, trading around $63.46 per barrel.
The big picture:"A price-driven decline in U.S. production would be a pivot point for the oil market — and set conditions for a potential price recovery," S&P VP Jim Burkhard said in a statement.
"But much will depend on the severity of an economic slowdown and the impact on demand growth beyond 2025," he said.
State of play: The accelerated increase in OPEC+ barrels and economic headwinds from trade wars are prompting bearish predictions.
S&P now sees global demand growing 750,000 barrels per day (bpd) this year, down from their prior estimate of 1.25 million.
Its findings are based on Brent crude averaging in the mid-to-low $60s per barrel for the remainder of this year, with WTI in the $60s or high $50s.
There's additional risk if trade tensions don't cool and OPEC+ keeps quickly unwinding production curbs.
How it works: S&P sees U.S. crude production averaging 13.46 million bpd this year, about 250k above 2024.
While shale production is fairly nimble, responses to price changes still have a lag time, and new barrels from offshore wells and other long lead time projects are less price-sensitive, S&P notes.
But next year it sees output dipping to 13.33 million bpd.
What we're watching: How various analyses shift in months ahead with the never-a-dull-moment changes in trade friction.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
18 minutes ago
- Business Insider
Nasdaq 100 Index Today: QQQ Jumps on U.S.-China Trade Developments, Tesla Turnaround
The Nasdaq 100 (NDX) is in green territory on Friday after falling by 0.80% on Thursday. The technology index is rising following positive signs in the U.S.-China trade relationship and a better-than-expected jobs report. Confident Investing Starts Here: This morning, nonfarm payroll job additions for May tallied in at 139,000, well above the 126,000 forecasted by economists. However, May's reading was still below the 147,000 jobs added in April and the monthly average within the past year of 149,000 jobs. Furthermore, the May unemployment rate was 4.2%, which remained unchanged from April and in line with the rate between 4.0% and 4.2% over the past year. In a sign of easing tensions between the U.S. and China, Beijing has granted suppliers of three top U.S. automakers with temporary rare earth export licenses. Rare earth elements are critical in the production of semiconductors, cars, and planes, providing China with leverage in negotiating trade terms given its near-monopoly on them. On top of that, Boeing (BA) has resumed the shipment of commercial jets to China. This morning, a Boeing 737 Max aircraft began its journey to Hawaii, a stop on its way to Zhoushan, China, where the delivery will be finalized. The Nasdaq 100 is up by 1.20% at the time of writing. Which Stocks are Moving the Nasdaq 100? Next, let's dive into TipRanks' Nasdaq 100 Heatmap, which illustrates the stocks that have contributed to the index's price action. Tesla (TSLA) is mounting a comeback with a 5.56% jump after CEO Elon Musk and Trump exchanged blows on social media over the tax and spending bill yesterday. TSLA stock plunged by 14% on Thursday, erasing approximately $150 billion in market capitalization. Palantir (PLTR) is also a top performer within the Nasdaq 100, rising by over 5%. On the other hand, Broadcom (AVGO) is taking a tumble after the semiconductor company reported its earnings. Elsewhere, most stocks within the index are in the green as we head into the weekend. QQQ Stock Moves Higher with the Nasdaq 100 The Invesco QQQ Trust (QQQ) is an exchange-traded fund (ETF) designed to track the movement of the Nasdaq 100. As such, QQQ is rising in correlation with the Nasdaq 100 today. Wall Street has high expectations for QQQ stock. During the past three months, analysts have issued an average QQQ price target of $584.53 for the stocks within the index, implying upside of 10.19% from current prices. The 102 stocks in QQQ carry 88 buy ratings, 14 hold ratings, and zero sell ratings.
Yahoo
20 minutes ago
- Yahoo
The Trump-Musk feud could be one of the catalysts for a coming 10% stock correction, former JPMorgan strategist says
Marko Kolanovic predicts a stock market pullback could be in the cards. Kolanovic thinks Tesla's decline on the Trump-Musk feud could be among the catalysts that spark a decline. Other problems he sees for the market include high valuations and economic uncertainty. Former JPMorgan chief market strategist Marko Kolanovic sees a stock market pullback in the cards, and the Trump-Musk feud could be one of the triggers that sets off a decline. Speaking on CNBC on Thursday, Kolanovic predicted a coming correction of 5%-10% that could be set off by a drop in Tesla's stock price. "It's a little bit of a sideshow. It's important for certain companies, and it can spill over," Kolanovic said of the president's fallout with Musk. "Tesla is one of the biggest holdings of retail investors. There's a little ecosystem of stocks around it. I think it could be a little bit of a catalyst." In a post on X on Thursday, Kolanovic pointed to popular retail stocks such as Tesla, Palantir, and Super Micro as potential triggers of a momentum crash. Tesla stock plunged 14% on Thursday as Trump responded to Musk's criticisms of the big GOP tax and budget bill. However, Kolanovic also noted that the Trump-Musk fight would be one possible catalyst for a market pullback among many. Uncertainty in the economy and the trade war are also looming problems. "We're close to all-time highs, but we still have all the problems," Kolanovic said. "We have a trade war, we have signs of an economic slowdown." Valuations are stretched, he said, with the Nasdaq close to record highs even as rates remain elevated, and Kolanovic sees warning signs in the bond market. The risk-reward tradeoff for stocks versus bonds looks unattractive, as the 10-year Treasury yield hovers around 4.4%. That means equity investors aren't getting a great return in excess of the risk-free rate. There's also the lingering concern about Fed independence, with Trump repeatedly pressuring Powell to cut interest rates. Macro risks are mounting as well. Kolanovic pointed to the weak ADP jobs report earlier this week, which reported 37,000 new jobs compared to economists' expectations of 110,000. While the May jobs report showed higher-than-expected job growth, April and March numbers saw significant downward revisions. A correction could present a potential buying opportunity, but that's only if recession risks dissipate, Kolanovic said. Read the original article on Business Insider
Yahoo
24 minutes ago
- Yahoo
Why Dollar General Stock Zoomed Nearly 17% Higher This Week
The company got a real lift from its impressive first-quarter earnings report. It could very well be a go-to stock in its industry should the economy head south. 10 stocks we like better than Dollar General › According to data compiled by S&P Global Market Intelligence, discount retailer Dollar General's (NYSE: DG) share price ballooned by almost 17% across the trading week. In retrospect that wasn't surprising, as the company simply crushed it in its latest earnings report, and analysts fell over themselves publishing bullish new takes on its stock. Dollar General delivered its first-quarter figures Tuesday morning, and investors couldn't wait to pile into its shares. This was understandable, because those fundamentals were solid. The retailer's net sales climbed more than 5% higher year over year to land at $10.4 billion. This was on the back of a 2%-plus rise in same-store sales, always a core performance metric in the retail industry. Profitability headed north too, with GAAP net income rising almost 8% to slightly under $392 million. In per-share terms, Dollar General earned $1.78. Both headline figures topped the consensus analyst estimates. On average, pundits tracking the stock were modeling $10.25 billion on the top line, and only $1.46 per share for net income. Some of those pundits might not be underestimating Dollar General quite so much. A clutch of them raised their price targets on the stock, with a few even upgrading their recommendations. One of the upgrades was enacted by Oppenheimer's Rupesh Parikh, who now feels the company is worthy of an overperform (buy) rating at $130 per share, where previously it was only rated a perform (hold). According to reports, Parikh was not only impressed by Dollar General's ability to sustain 2% to 3% comparable sales growth figures, he feels it's an excellent play in a recessionary environment. That's been a persistent fear lately of numerous economists and more than a few investors, given the current shakiness in the global and domestic economies. Dollar General definitely seems as if it's on a roll, and it might just become a hot, go-to retailer if those gloomy predictions come true. It's absolutely a stock to consider for our times. Before you buy stock in Dollar General, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Dollar General wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Why Dollar General Stock Zoomed Nearly 17% Higher This Week was originally published by The Motley Fool
