US Oil Production Surprises Upside Despite Lower Prices, Says Daan Struyven

US Oil Production Trends

• ⚡ US oil production continues to surprise to the upside despite lower prices, with liquid supply up 1.3 million barrels per day.
• 💡 About half of this growth comes from crude oil, with the other half from natural gas liquids.
• ⚠️ Forecasts for a slowdown in US shale production have not yet materialized, remaining more of a prediction than an effect.

Global Oil Market Dynamics

• 🌍 The market has been in an oversupplied environment due to strong supply growth not only from the US but also from Brazil, Guyana, and core OPEC countries.
• 📈 Geopolitical shocks have temporarily pushed oil prices higher, but the market often refocuses on fundamentals.
• 💰 Current oil price levels are considered attractive for the US consumer and the economy as a whole.
• 📉 However, prices are becoming too low for higher-cost US shale producers, with estimated breakeven points for a 15% return in the low $50s.

Metals vs. Energy Markets

• 📊 Metals have performed incredibly well, partly because Fed cuts tend to support metals prices more significantly than energy prices.
• 🧠 Energy is viewed as a spot asset driven by short-term supply and demand, while metals are more forward-looking with longer duration.
• 🏦 Central banks buying gold, combined with potential Fed cuts and constrained supply, have driven metals prices higher.

Specific Metal Market Drivers

• ⚠️ Potential US tariffs are a bullish driver for silver and copper, leading to metal being shipped into the US ahead of potential price increases.
• 📉 This has resulted in low inventories in global markets, putting upward pressure on silver and copper prices.

Strategic Reserves and Future Outlook

• ⛽ Refilling the Strategic Petroleum Reserve (SPR) is happening at a very slow pace.
• 📉 There's an argument that the US, as a dominant oil producer and net exporter, may not need the SPR at previous levels.
• 🔮 The outlook suggests prices in 2025 and 2026 will likely be below their long-term fair value, making current prices potentially attractive for long-term investment.