This Oil Delusion Cannot Be Ignored

I’m going to do something today that most people cannot. 

Today, I’ll tell you about the future.

Now before you start looking for a crystal ball, pouring out your tea leaves, or start looking for some plutonium to fuel the flux capacitor in your DeLorean, you should know that this isn’t some feat of magical foresight — everyone should see this one coming.

And yet, delusions still run rampant among the experts in the market. 

Hey, maybe they get caught up in their own hype. Perhaps they drink too deeply from the kool-aid to see what’s really going on.

But for those of you that do see through the veil, you’ve been smiling all the way to the bank.

Yesterday, the Macquarie Group came out and projected that U.S. oil production would end the year at around 14 million barrels per day then climb to 14.5 million barrels per day in 2025. 

As reported by Bloomberg, Macquarie’s analysts had said, “this year’s headwinds could flip to tailwinds in a scenario where the growth impulse from private companies recharges and public companies attack high-graded resource bases next year.”

I wish I could say these kinds of predictions come straight out of left field, but the truth is that they aren’t the only ones making wild predictions these days. 

Back in mid-February, Jim Cramer suggested that U.S. oil companies would be pumping 15 million barrels per day right now if they weren’t so greedy:

Look, I’ll confess I’ve had some bouts of wishful thinking in the past, so I understand wanting to be optimistic when it comes to our energy security. 

But there’s a difference between optimism and delusion. 

Like most people, I was pleasantly surprised in 2023 when U.S. oil output defied all the skeptics and rose by nearly a million barrels per day. Like I mentioned earlier, it’s not an extremely bold prediction to see little to no growth in U.S. production this year.

And I know I’m not the only one that sees this coming.

It may have taken the market a while, but they’re finally starting to realize that the supply/demand fundamentals are much, much tighter than they look.

This will become much more apparent as we head into the summer driving season when demand typically peaks for the year. 

However, the problem isn’t necessarily that U.S. oil output will remain stagnant in 2024. Even the EIA has to admit that growth will be abysmal for the rest of the year, with U.S. production averaging 13.2 million barrels per day for the rest of the year. 

I told you earlier this month that OPEC has taken control of global spare capacity. When the OPEC+ group gets together next week, do you really think they won’t extend their current production curtailment of 2.2 million barrels per day? 

In fact, the Russian government recently told its oil companies to cut output and make sure they hit their 9 million bbls/day target. 

I guess when you don’t have the ability to refine your own crude, you’d want to reduce production — better pray those Ukrainian drones don’t go for more.

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.

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