2025 Oil Market Looking Bearish Despite OPEC Production Cuts; US Companies to Follow

The energy complex is drifting lower so far this morning with gasoline, diesel, and crude oil futures all trading down around 1%. The announcement of the extension of OPEC+’s voluntary production cuts served less as a booster for bullish sentiment and more of a confirmation of a global oil supply glut.

US oil production companies are viewing the oil economic outlook similarly with one of the big, household name producers highlighting its intent to cut back production in its 2025 capital plan. Despite boisterous ambitions that the US is going to flood the oil market over the next four years, producers are unlikely to play along if prices remain where they are today, which they are expected to, for the next year anyway.

The Bureau of Labor Statistics released their payroll numbers this morning, showing the US adding 227k jobs in November and revising October’s payrolls to +36, up from 12k reported last month. The U-6 unemployment rate ticked up .1% to 7.8&, while the headline rate remained unchanged at 4.1%.

The EPA proposed an adjustment to its cellulosic volume requirement for 2024 after the American Petroleum Institute filed a petition requesting a waiver. The proposed changes will lower the D3 RIN target to 880 million for this year (due to a 120,000 credit deficit) but will not change the total renewable fuel requirement. Ample renewable diesel production should have no issue picking up the slack. D3 RIN prices have dropped 75 cents per credit over the last month.

It’s been a couple paragraphs since we talked about how much oil we have: the EIA published a note yesterday highlighting Argentina’s oil and natural gas production nearing record highs. While it’s assumed this production is already priced into the futures markets, some are left wondering how the Vaca Muerta shale formation got its name.