Traders Bearish on U.S. Oil

Newsletter No. 50

Good morning,

It is Thursday, January 25, 2024. This is the 50th edition of The Upside! First, I want to thank all of you for being amazing, loyal readers. There is so much oil and gas news to bring you this week, so I am just going to jump right in. 

This Week’s Headlines

  • U.S. Oil and Gas Industry Hits Record $190B Consolidation in 2023

  • “Ask Jay” on Why Invest at King?

  • Traders Bearish on U.S. Oil

  • Rystad Energy Predicts Surge in Oil Prices Driven by Strong Demand

U.S. Oil and Gas Industry Hits Record $190B Consolidation in 2023

The oil and gas industry is going through its biggest-ever consolidation, with mergers and acquisitions hitting a record $190 billion in 2023. Big players like ExxonMobil, Chevron, and Occidental Petroleum led this consolidation trend. The need for these arises from a decade of reduced investment in exploration. Companies are turning to mergers and acquisitions to replace declining reserves and secure long-term profits. The Permian Basin in Texas and New Mexico has been a crucial factor in this consolidation. While 2024 might see a slowdown in mergers, the industry remains dynamic. There is potential interest in privately-held Endeavor Energy Resources. Overall, the U.S. oil and gas sector has had a remarkable year, solidifying its position as the largest crude producer in history, supported by booming production from domestic oil companies.

Ask Jay

In this week’s “Ask Jay,” I am continuing the series of videos answering the question “Why Invest in Oil and Gas?” and more specifically, “Why Invest With King?” You can watch this video to find out the third “Why?” 

Traders Bearish on U.S. Oil

Traders are selling West Texas Intermediate (WTI) crude in anticipation of a surge in U.S. production later this year, despite industry projections indicating slower growth. The Energy Information Administration predicts a potential daily output of 13.2 million barrels in 2024, only slightly higher than 2023’s average. Last year’s unexpected production growth has left traders cautious and expecting more explosive growth. However, the industry’s current stance suggests a less ambitious approach.


Rystad Energy Predicts Surge in Oil Prices Driven by Strong Demand

Rystad Energy, an energy research company out of Oslo, Norway, anticipates a boost in oil prices due to robust global demand, challenging the perception of weak demand in early 2024. Claudio Galimberti, head of global oil macro research at Rystad Energy, notes that despite oil prices hovering around $75 to $80 per barrel, steady demand growth could tighten market balances, leading to higher prices. Rystad Energy expects tight oil balances in the first and second quarters, prompting a potential unwinding of cuts by Saudi Arabia and OPEC. While concerns about demand growth persist, Rystad Energy’s optimistic outlook suggests a significant increase in oil prices throughout the year. Check out my blog for more insights on America’s “addiction” to fossil fuels and meeting the demand.


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Thank you for your continued support, and if you have any questions for myself or any member of the King team, please don’t hesitate to reach out.

All the best,