SOLR - USO: OPEC Gets Wrecked By U.S. Shale Amid Poor Economic Growth
2024-01-23 06:12:28 ET
Summary
- Global oil fundamentals are deteriorating due to poor economic growth, technical recessions, and emerging market sovereign defaults.
- Surging oil production from US shale and non-OPEC producers will offset Saudi Arabian-led production cuts, leading to a substantial oil surplus in 2024.
- A possible reduction of geopolitical tensions in the Red Sea and the end of voluntary production cuts in March may lead to a deterioration of WTI oil prices.
The fundamentals for oil are breaking down with the global economy increasingly set to be beset by poor economic growth, technical recessions, and emerging market sovereign defaults. The International Energy Agency's January Oil Market Report predicts a substantial oil surplus in 2024 with surging oil production from US shale and new capacity from non-OPEC producers helping offset Saudi Arabia-led production cuts. Record output from the US, Guyana, Brazil, and Canada should boost global supply this year by 1.5 million barrels per day to a record 103.5 million b/d. Further, the additional voluntary OPEC+ production cuts of 2.2 million b/d brought in towards the end of 2023 look set to lapse from March and it's not quite clear there will be an extension. United States Oil Fund ( USO ) invests primarily in listed crude oil futures contracts and is an accessible way for retail to play the commodity....
USO: OPEC Gets Wrecked By U.S. Shale Amid Poor Economic Growth