Oil prices are about to see an inflection point to the upside - Bleakley Advisory Group

[Oil gas refinery or petrochemical plant.]
RonFullHD

Oil prices are poised for an upward turn despite OPEC+ agreeing to increase supply, said Peter Boockvar, Bleakley Advisory Group CIO.

“We’re in the process of seeing low prices, cure low prices,” said Boockvar in an interview at CNBC, noting that U.S. shale has accounted for more than 80% of all non-OPEC supply growth over the past fifteen years.

This production decline represents a significant shift in market dynamics, as U.S. production has been a major counterbalance to OPEC’s influence.

U.S. oil rig counts have fallen every week in May and have reached their lowest level since 2021. The current level is 461.00, down from 465.00 last week, and down from 497.00 one year ago.

The reduction in drilling stems from both economic and geological factors, Boockvar said. He cited recent earnings reports, particularly from Diamondback Energy (FANG [https://seekingalpha.com/symbol/FANG]), indicating that shale basins are approaching production limits, with the Permian Basin being the only region still showing growth potential.

“I think energy oil prices here at $60 is dirt cheap, and we’re about to see an inflection point here to the upside,” Boockvar predicted.

When discussing the upcoming increase in steel (SLX [https://seekingalpha.com/symbol/SLX]) and aluminum tariffs from 25% to 50%, Boockvar warned of broader economic consequences. While beneficial for steel producers (PICK [https://seekingalpha.com/symbol/PICK]), he emphasized that these tariffs could negatively impact numerous industries that rely on steel as an input, including construction and drilling operations.

“Probably more jobs lost in the users of steel that are sort of kept and hired within steel,” Boockvar told CNBC, suggesting that the economic costs of protecting steel jobs would likely outweigh the benefits.

He added that the tariffs could potentially increase costs for multifamily housing construction (ITB [https://seekingalpha.com/symbol/ITB]), which would eventually flow into Consumer Price Index calculations.

Oil ETFs: (USO [https://seekingalpha.com/symbol/USO]), (UCO [https://seekingalpha.com/symbol/UCO]), (DBO [https://seekingalpha.com/symbol/DBO]), (OILK [https://seekingalpha.com/symbol/OILK]), (USL [https://seekingalpha.com/symbol/USL])

Natural Gas ETFs: (UNG [https://seekingalpha.com/symbol/UNG]), (BOIL [https://seekingalpha.com/symbol/BOIL]), (UNL [https://seekingalpha.com/symbol/UNL])

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