Crude Market Has De-Risked For Now. Are We Heading To Sub-$60 Oil?
A crude oil tanker moored near the Mediterranean port of Limassol. Cyprus. (Photo: by Danil Shamkin)
The recent oil price spike ended almost as quickly and routinely as it arrived. Global proxy benchmark Brent went from low $60 per barrel price levels at the end of May to high $70 levels and back by end-June, gaining and shedding 20% in no time.
And in that time, the market saw OPEC+, a select group of Russia-led oil producers and the Organization of the Petroleum Exporting Countries, spearheaded by Saudi Arabia, raise its collective production level for July by another 411,000 barrels per day.
The move was the third consecutive output hike of a similar announced by OPEC+. It was followed by Israel and Iran indulging in a heated military exchange, a subsequent but hitherto empty threat to close the Strait of Hormuz by Tehran, and a bombing by the U.S. of Iran's nuclear facilities.
But an easing of fears of a wider regional conflict in the Middle East on Monday, and the cessation of hostilities punctured the rally, as market fundamentals pointing to a well supplied market returned with a vengeance.
The rally, driven by heightened risk premiums, was already on a weak and uncertain footing with plenty of oil in the market, and predictions of muted demand growth by the International Energy Agency.
Problem is that, during a phase of heightened geopolitical tensions, it is easy to lose sight of the fact that oil is not just a story of supply, but quite critically a story demand too.
Oil Is Not Just A Story Of Supply
In its June market update, the IEA forecast global oil demand to increase by 720,000 bpd in 2025. It also added that growth in 2026, at 740,000 bpd, will be held back by 'a challenging economic outlook and the uptake of clean energy technologies.'
Of course, IEA is often deemed too bearish in some quarters, and there are others in the market predicting demand growth north of 1 million bpd for 2025 and 2026, including OPEC, which puts it at 1.3 million bpd, according to its latest monthly update.
Even if the most optimistic demand growth forecast is taken at face value, that can still be more than met by production growth from non-OPEC sources, and that too at a time when OPEC is bringing back more barrels.
It's precisely why Wall Street is somewhat busy moving past 'what if' ad hoc predictions on oil prices ranging between $80 and $110. They were all based on hypotheticals about Iran shutting down the Strait of Hormuz, restricting oil flows through the critical maritime artery, halving them for a month and reducing them by 10% for the following 11 months.
As even that unrealistic prospects fades away, the oil market is staring at a surplus for the fourth quarter of the year, especially for light sweet crude. Back in May, prior to the escalation of tensions in the Middle East, for 2026, Goldman Sachs was predicting sub-$60 average oil prices; $56 for Brent and $52 for U.S. benchmark West Texas Intermediate.
It was part of rising number of its peers lining up to trim their price predictions for 2025-26 down to the $60s or below. That world is rapidly returning and will likely stay barring a major geopolitical escalation or macroeconomic event.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New York Post
an hour ago
- New York Post
A mystery Microsoft mogul has been quietly assembling the priciest Palm Beach estate near Mar-a-Lago
In a string of blockbuster deals unfolding just north of Mar-a-Lago, a mystery buyer linked to Microsoft has quietly assembled what could become one of the most valuable private estates in the U.S. — a sprawling oceanfront compound in Palm Beach with an estimated price tag between $250 million and $350 million, according to reporting from The Wall Street Journal and The Real Deal. The buyer — whose identity remains unconfirmed but is widely rumored to be Microsoft billionaire Charles Simonyi — has spent the past several months scooping up prime properties on North Ocean Boulevard. According to the Journal, the buyer paid roughly $250 million across four separate deals, while The Real Deal pegs the total value closer to $350 million. Advertisement 8 In Palm Beach, a mystery buyer is quietly assembling one of the most valuable private estates in the country, spending around $250 million so far on a series of high-priced acquisitions near Mar-a-Lago. Getty Images The core of the assemblage comprises two rare oceanfront lots at 1063 and 1071 N. Ocean Blvd., previously owned by cosmetics heir William Lauder. Together, the 2.3-acre parcels offer 360 feet of beach frontage. Lauder, who initially intended to keep the land for personal use, had listed the properties for a combined $177.8 million. Advertisement Sources told TRD the sale went through in February via a transfer of LLCs, rather than a deed, for more than $160 million. 8 The buyer has snapped up four parcels, including two oceanfront lots formerly owned by cosmetics heir William Lauder, a Mediterranean-style home across the street, and a neighboring inland property — all at prices well above market value. Google Maps In June, the same buyer picked up two non-oceanfront homes across the street in separate off-market transactions. A Delaware entity called Creekshore LLC acquired a 3,600-square-foot home at 1066 N. Ocean Blvd. from former Hearst executive Cathie Black and her husband, attorney Thomas Harvey, for $18 million. Advertisement The couple had bought the property for $4.2 million in 2018. 8 The roughly 3-acre assemblage boasts 360 feet of beachfront on North Ocean Boulevard and rivals recent megadeals by Ken Griffin and Jeff Bezos. MEGA 8 Charles Simonyi REUTERS In an email to the Journal, Harvey said he did not know the 'true identity of the buyer,' adding that the offer was unsolicited. Advertisement Next door, another Delaware LLC named Mango Leaf paid $30 million for a 5,800-square-foot home at 1072 N. Ocean Blvd., which last sold for $5.3 million in 2017. Both sale prices far exceeded market value, local brokers told the Journal. Altogether, the assemblage now spans nearly 4.2 acres. If completed as rumored, it would rival Palm Beach's most legendary compounds. 8 One remaining holdout is rock legend Jon Bon Jovi, who reportedly rebuffed overtures to sell his adjacent $43 million estate. Drew Gurian/Invision/AP Billionaire Ken Griffin holds the current record with a 19.3-acre estate assembled for $350 million and expected to be worth over $1 billion upon completion, The Post previously reported. Amazon founder Jeff Bezos, meanwhile, has spent about $234 million on Indian Creek Village properties in nearby Miami. While the buyer remains publicly unidentified, incorporation records reviewed by the Journal show ties to Greyson Blue, a Seattle-based attorney with K&L Gates who previously worked for the Gates Foundation. Blue's name appears in the registration of the Delaware entities used in the deals. He did not respond to requests for comment. A person close to the Gates Foundation told the Journal that Bill Gates is not behind the purchases. 8 Though the true buyer remains unidentified, incorporation records link the inland purchases to Seattle-based attorney Greyson Blue, who has ties to the Gates family through his past work at the Gates Foundation. Meghan McCarthy / The Palm Beach Daily News / IMAGN 8 While some speculate Bill Gates, Steve Ballmer or Charles Simonyi could be involved, none have confirmed, and the Gates Foundation denies involvement. Advertisement Simonyi — credited with creating Microsoft Word and Excel — has an estimated net worth of $8.2 billion, according to Forbes. Sources told TRD he is likely the buyer. Other names floated include former Microsoft CEO Steve Ballmer, whose net worth exceeds $140 billion, and Gates himself, whose daughter Jennifer Gates has owned a $33 million equestrian compound in nearby Wellington. Despite the buyer's aggressive push, not every property on the block has been secured. Rock legend Jon Bon Jovi, who owns the mansion at 1075 N. Ocean Blvd., has so far rebuffed offers. 'We just don't have these kinds of large properties available for sale,' said Dana Koch of the Corcoran Group, speaking to the Journal. 'After buying all of these properties at a mind-boggling number, [the buyer] is protecting his investment and affording himself even more privacy.' Advertisement 8 149 E. Inlet Drive. Google Maps Bon Jovi paid $43 million for his 0.7-acre estate in 2020. Records show the 10,000-square-foot home includes six bedrooms, a wine cellar and a gym. Sources told TRD that the buyer is also eyeing the neighboring property at 1055 N. Ocean Blvd., owned by real estate investor William Rickman Jr., who purchased the 1930s-era home for $13.1 million in 2016.
CNBC
an hour ago
- CNBC
Coterra shifts its view on oil, again. Here are our 3 takeaways as investors in the stock
Coterra Energy is refocusing on oil. CEO Thomas Jorden shared the company's decision not to reduce its oil rig count at the JPMorgan Energy conference earlier this week. Here are several key takeaways for investors. 1. For starters, the move signals that Coterra has regained confidence in the direction of oil markets — and inherent in that is more confidence in the outlook for the economy. Alongside its first-quarter earnings report in early May, Coterra said it planned to shift some capital expenditures from its oil assets into natural gas production amid concerns about a potential tariff-driven recession that would dent demand for oil, leading to lower prices. As part of the shift, the company said it planned to reduce its oil rig count in the Permian Basin to seven. They're now walking back that change. "We're holding firm right now at nine [oil rigs] and we have very few under contract, so we have the flexibility," Jorden said at the conference Tuesday. "We were looking at the possibility of a collapse," he added, explaining the company's view last month. "We're feeling a little better about that now." @CL.1 3M mountain WTI three month performance When Coterra reported its Q1 on May 5, U.S. oil benchmark West Texas Intermediate crude had fallen around 20% since President Donald Trump announced his "reciprocal" tariffs in early April. Oil cartel OPEC was also signaling that it would increase production. As Trump walked back his most aggressive trade policies, the outlook for the economy improved, which was supportive for oil prices. Then, in mid-June, the start of the Iran-Israel conflict caused a temporary oil price spike as traders worried about supply disruptions. Prices have given back those gains as tensions eased. WTI has dropped more than 11% this week alone as the market deemed Iran-Israel conflict, and last weekend's U.S. bombing of three Iranian nuclear sites, not systemically concerning for now. With few rigs under contract, Coterra can scale back if circumstances change yet again. But for now, we were encouraged to hear Coterra isn't worried about a price collapse driven by a recession. 2. In reacting to the first-quarter earnings, Mizuho analysts flagged concerns that Coterra's lower oil activity spending could have negative implications down the road, particularly as it relates to the company's three-year goal of oil production growth of at least 5% annually on average. "We believe the impact will be felt in 2026-27 given the loss in momentum," the analysts wrote in a note to clients. Those worries might be alleviated as maintaining nine rigs could help Coterra hit its three-year goal, which the company outlined in February . The increased rig count, however, does put Coterra's capital expenditure spending at the higher end of its 2025 guidance, which falls between $2 billion and $2.3 billion. Keep in mind, though, investors may not fret capex coming in at the high end of the range if it's the result of more rigs staying in operation with drilling being done efficiently. It would be concerning if drilling activity fell off, but capex went higher. 3. At the same time, Coterra's decision to keep its oil rig count steady for now is not impacting the company's plans to increase activity in the natural gas-focused Marcellus Shale. "We are proceeding," Jorden said at the conference. "Gas prices look very constructive and we really do see the Marcellus as a really meaningful part of our program go forward." @NG.1 3M mountain Natural Gas three month peformance Coterra stands to win big on natural gas if the Constitution Pipeline project, which starts in the Marcellus, were to get revived. Coterra also has active nat gas assets in the Anadarko Basin and started drilling again in the Dimock Township of Pennsylvania following a 12-year-long ban that was lifted in December 2023. The company plans to drill 11 wells this year and expects to have around 17 total in the years to come. (Jim Cramer's Charitable Trust is long CTRA. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Hamilton Spectator
an hour ago
- Hamilton Spectator
Republican plan for nationwide private school vouchers deemed in violation of Senate rules
WASHINGTON (AP) — A Republican plan to expand private school vouchers nationwide was dealt a major setback Friday when the Senate parliamentarian said the proposal would run afoul of procedural rules. The years-in-the-making plan would have created a federal tax credit supporting scholarships to help families send their children to private schools or other options beyond their local public schools. But in an overnight announcement, the Senate parliamentarian advised against including the proposal in President Donald Trump's tax cut and spending bill . It added to mounting problems for Republicans as key proposals were deemed ineligible for the filibuster-proof reconciliation package. The parliamentarian's rulings are advisory but are rarely, if ever, ignored. It's unclear if Republicans will try to rewrite the provisions or simply drop them from the bill. Another education plan deemed ineligible for reconciliation would have exempted religious colleges from a federal endowment tax . The proposal sought to raise the tax rate on wealthier colleges' endowments while carving out religious institutions like Hillsdale College, a conservative, Christian school in Michigan and an ally of the Trump administration. Oregon Sen. Jeff Merkley, the top Democrat on the Senate Budget Committee, said, 'We have been successful in removing parts of this bill that hurt families and workers, but the process is not over, and Democrats are continuing to make the case against every provision in this Big, Beautiful Betrayal of a bill that violates Senate rules.' School voucher provision had been seen as a win for supporters The school voucher provision was seen as a breakthrough victory for proponents who have been pushing the idea for years. A similar plan failed to gain support from Congress in 2019 when it was championed by Betsy DeVos , the education secretary during Trump's first term. Campaigning for his second term, Trump again promised to deliver some form of 'universal school choice.' Under the reconciliation plan, donors who gave money or stock to K-12 scholarship programs would receive 100% of the contribution back in the form of a discount on their tax bills. It would allow stock holders to avoid paying taxes they would usually face if they donated or transferred their stock. Nearly all families would qualify to receive scholarships except those making more than three times their area's median income. A House version of the bill allowed up to $5 billion in tax credits a year, running through 2029. The Senate version reduced it to $4 billion but included no end date. Supporters said the proposal would expand education options for families across the country, offering alternatives to students in areas with lower-performing public schools. Opponents said it would siphon money from public schools and open the door for fraud and abuse. Republican-led states have similar programs Similar scholarship and voucher programs have proliferated in Republican-led states such as Texas, which recently passed a $1 billion program. States have increasingly offered vouchers to families beyond only the neediest ones, contributing to budget concerns as expenses rapidly pile up. The Senate's college endowment proposal sought to raise a tax on schools' investment income, from 1.4% now to 4% or 8% depending on their wealth. It would apply only to colleges with endowments of at least $500,000 per student, and it excluded all religious institutions. It would have exempted a small number of colleges, including Hillsdale, which lobbied against it. Some small colleges that would have been hit hard by the proposal are now hopeful that Republicans will carve out an exemption for all smaller schools. 'The religious schools exemption showed senators were concerned about the endowment tax hike's impact on small colleges,' said Lori White, president of DePauw University, a private liberal arts school in Indiana. 'After the parliamentarian's rulings, the best way to protect those and other small institutions from that impact is now to exempt all colleges with fewer than 5,000 undergraduate students.' ___ The Associated Press' education coverage receives financial support from multiple private foundations. The AP is solely responsible for all content. Find the AP's standards for working with philanthropies, a list of supporters and funded coverage areas at . Error! Sorry, there was an error processing your request. There was a problem with the recaptcha. Please try again. You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy . This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply. Want more of the latest from us? Sign up for more at our newsletter page .
