Peter Boockvar: Inflection Point for Oil Prices and Steel Tariff Implications

Oil Price Inflection Point

• 📉 The rig count for crude oil has fallen to its lowest level since 2021, indicating that low prices are curing low prices.
• 💡 US shale production, which accounts for over 80% of non-OPEC supply growth in the last 15 years, is showing signs of topping out both geologically and price-wise.
• ⛽ This trend is seen as an offset to OPEC's efforts to raise supply, suggesting they may only be increasing quotas to match existing production levels.
• 💰 Peter Boockvar believes that oil prices at $60 are "dirt cheap" and that an inflection point to the upside is imminent.

US Shale Production Dynamics

• ⚠️ Both price and geological factors are contributing to the slowdown in US shale production.
• 🧩 Shale basins are topping out in terms of production per rig, with natural gas being the only remaining area for growth, which also shows signs of topping.
• 🌎 US shale has been a critical swing factor outside of OPEC in driving energy prices.

Steel and Aluminum Tariffs

• 📈 Tariffs on steel are set to increase from 25% to 50%, which is positive for steel producers but may have negative implications for users of steel.
• 🏗️ Industries like construction and drilling rig companies, which rely heavily on steel, could face increased costs.
• 🏘️ The rise in steel prices could negatively impact the production of multi-family housing, potentially affecting CPI.
• ⚖️ While steel jobs might be saved or created, the broader economic impact suggests that more jobs could be lost among steel users than are gained in the steel industry itself.