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- Oil prices fell as traders await clarity on President-elect Donald Trump’s policy agenda.
- Banks are gearing up for oil prices to fall below $60 a barrel by the middle of Trump’s term.
- Standard Chartered predicts the dramatic slowdown in U.S. oil production growth witnessed in 2024 will continue over the next two years.
Oil prices fell in Monday’s morning session as traders await U.S. President-elect Donald Trump’s inauguration in the hope of some clarity on his policy agenda. Brent crude for March delivery was down 1.5% to trade at $79.66 per barrel at 11.20 am ET while WTI crude for February delivery declined 1.8% to $76.46 per barrel. According to PVM oil analyst Tamas Varga, the price declines can be chalked up to the huge uncertainty over the incoming president’s new policies.
“Given the performance of the market so far this year, it is reasonable to see some people take profit before the Trump administration’s modus operandi becomes clearer.” Varga told Reuters.
Last month, a survey by law firm Haynes Boone LLC revealed that banks are gearing up for oil prices to fall below $60 a barrel by the middle of President-elect Donald Trump’s new term. Trump says he’ll push shale producers to ramp up output, even if it means operators “drill themselves out of business.” However, commodity analysts at Standard Chartered have predicted that the dramatic slowdown in U.S. oil production growth that we witnessed in 2024 will continue over the next two years.
However, commodity experts at Standard Chartered have argued that the dynamics of U.S. shale oil production make long-term supply increases difficult to maintain, noting that the country’s oil production is dominated by a few majors and independent producers, alongside private companies, rather than a national oil company as is often the case with many OPEC producers. These companies have largely left behind their trigger-happy, drill-baby-drill days and adopted strict capital discipline, eschewing rapid production increases in favor of returning more capital to shareholders in the form of dividends and share buybacks. StanChart also points out that extensive M&A activity in the sector has reduced the number of operating companies, changing the landscape from a patchwork of small producer acreages to larger contiguous acreage. This new modus operandi allows for complex drilling and completion techniques, including multi-pad wells with extremely long lateral sections that are able to optimize spacing and associated infrastructure.
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