Oil Prices Predicted to Plummet Below $60 Under Trump

A new survey from law firm Haynes Boone LLC has revealed that banks are gearing up for oil prices to fall below $60 a barrel by the middle of President-elect Donald Trump’s new term, Bloomberg reported on Monday. 

The survey of 26 bankers showed that they expect WTI prices to drop to $58.62 a barrel by 2027, more than $10 lower than the intraday price of $69.87 at 11.00 am ET on Wednesday.

Trump says he’ll push shale producers to ramp up output, even if it means operators “drill themselves out of business.” However, it’s not clear he intends to accomplish this feat since U.S. oil is produced by independent companies and not a national oil company (NOC). Exxon Mobil’s (NYSE:XOM) Upstream President Liam Mallon recently dismissed the notion that U.S. producers will dramatically increase output under a second Trump term.

“I think a radical change is unlikely because the vast majority, if not everybody, is primarily focused on the economics of what they’re doing,” Mallon said last week at a conference in London.

Meanwhile, StanChart notes that following Scott Bessent’s recent nomination as Treasury Secretary, his Manhattan Institute June session where he spoke at a conference entitled ‘Towards a New Supply-Side: The Future of Free Enterprise in the United States’ is being scrutinised as a potential guide to policy. 

The commodity analysts point out that U.S. oil and gas output is currently ~40.7 mboe/d; U.S. oil and gas output has grown by an average of about 123 kboe/d per month since 2015, meaning adding 3 mboe/d would take less than 25 months. 

The commodity experts have noted that 41% of the post-2015 increase has come from natural gas, 28% from natural gas liquids (NGLs) and just 28% from crude oil. StanChart has predicted that the crude oil element of the next 3 mboe/d increase is likely to be significantly less than 20%, with natural gas likely to be the main instrument for meeting the new administration’s energy goals as crude oil output growth becomes increasingly difficult.

Recently, Morgan Stanley predicted that the U.S. natural gas market is poised to enter a new cycle of demand growth thanks to surging LNG exports and rising electricity demand.

By Alex Kimani for Oilprice.com

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