The Trump administration was ambitious in its energy policies. US Treasury Secretary Bentsen once publicly introduced his "3-3-3 Plan," which aimed to increase the real GDP growth rate to 3%, reduce the annual budget deficit from 7% of GDP to 3%, and boost US domestic oil production by 3 million barrels per day (bpd). However, economists and energy experts have warned that Bentsen's goals have little basis in reality. Despite the Trump administration's policies favoring fossil fuels, US oil production is likely to remain flat or decline, as low oil prices make it unprofitable for oil companies. Commodity experts at Standard Chartered Bank predict that US crude oil supply may decline by 158,000 bpd in 2025 and by 183,000 bpd in 2026, ending the growth momentum of the past four years under the Biden administration. Previously, the Federal Reserve Bank of Dallas noted in a survey that the breakeven point for US shale oil producers is a WTI crude oil price of $65 per barrel. Over the past month, WTI prices have mostly remained below this breakeven point, partly due to the OPEC+ alliance's decision to increase production. What do the data reveal? Standard Chartered Bank analyzed four reasons for its pessimism about US oil production growth from four data dimensions. First, according to the revised monthly data from the US Energy Information Administration (EIA), US crude oil production reached a record high of 13.488 million bpd in March. However, the average daily increase over these three months was only 30,000 bpd, compared to a growth of 270,000 bpd in 2024. The EIA, which is usually seen as optimistic about production growth, also predicts that US crude oil production will increase slightly from 13.2 million bpd in 2024 to 14 million bpd in 2027, an increase that is only about a quarter of what Bentsen promised. Secondly, according to data from energy company Baker Hughes, the number of US oil rigs has decreased by 41 this year and by 50 on a YoY basis. Part of the decline is due to improvements in drilling technology and processes, but Standard Chartered warns that this downward trend has persisted for 30 months. In addition, the number of frac crews has also plummeted to 186, a significant decline from the 300 crews during the peak of the COVID-19 pandemic. Finally, the number of drilled but uncompleted (DUC) wells has also halved from the pandemic peak in June 2020, reaching a low of 4,494 in February this year before stabilizing. The number of frac crews can serve as a supplementary indicator for measuring US shale oil and gas production, while the DUC well count may be a leading indicator of any shifts in completion activity. A decline in the DUC well count suggests that drilling activity is weakening. From a data perspective, it is evident that US energy companies have significantly reduced their investments in drilling to preserve profits and remain accountable to shareholders. The immediate impact of this decision may be a stabilization or decline in US energy production, thereby exerting upward pressure on oil prices.

Francisco Blanch, head of global commodities research at Bank of America, said on Monday that OPEC+'s plan to increase oil production is part of a Saudi strategy that will lead to a long but mild price war aimed at regaining market share. On May 31, OPEC+ member countries agreed to increase oil supply by 411,000 barrels per day (bpd) in July, marking the third consecutive significant production increase by the alliance. These increases are reversing years of supply constraints aimed at maintaining higher oil prices. In response, Blanch said in an interview with the media that this is not a short and sharp price war; instead, it will be a long and mild one. He pointed out that this reflects Saudi Arabia's intention to seize market share from US shale oil producers, who are currently in relatively good shape but face higher production costs. Blanch also said that Saudi Arabia is also striving to regain market share from other OPEC+ member countries. "They (the Saudis) have been alone in this price support measure for more than three years, which has allowed competitors to increase their production. Now they are no longer doing so," Blanch said. Blanch noted that this strategic shift has begun to yield results. According to the latest US oil drilling data from Baker Hughes, the number of active oil and natural gas rigs in the US has fallen to its lowest point in about four years. Similarly, analysts including Martijn Rats from Morgan Stanley pointed out in a report on June 2 that OPEC+ is likely to continue increasing production over the next three months, a move that will push oil prices down. This means that by October this year, the 2.2 million bpd of voluntary production cuts decided by OPEC+ in 2023 will have fully rebounded, completely eliminating the cuts made at that time.

As OPEC+ officially announced the continuation of its above-quota production increase in July, investors in the energy industry began to focus on the ultimate question: When will this round of production increases come to an end? What will be the subsequent impacts? As background, to maintain oil price stability, eight OPEC+ countries led by Saudi Arabia decided in 2023 to voluntarily cut production by 2.2 million barrels per day (bpd). After discussions, these countries began to lift restrictions at a rate of 137,000 bpd starting from April this year . As the "leading nations" within the organization grew increasingly dissatisfied with members such as Kazakhstan and Iraq for producing above their quotas, the oil production increase policy rapidly entered a "weaponized" state. Including the latest announced production increase in July, the eight OPEC+ countries will continue to lift production restrictions for the third consecutive month at a rate of 411,000 bpd . What will be the next move? Analysts including Martijn Rats from Morgan Stanley pointed out in a report on June 2 that OPEC+ is likely to continue increasing production over the next three months , a move that will push oil prices downward. This means that by October this year, the 2.2 million bpd production cuts will be fully reversed. Morgan Stanley analysts stated in the report: "The latest announcement shows that there is little sign of a slowdown in the pace of production increase quotas. The quota increase may create room for Saudi Arabia to increase production, with Kuwait and Algeria also benefiting to some extent." However, it will be difficult for the remaining members of the "Group of Eight" to achieve the same magnitude of production growth due to the quota increase. Morgan Stanley pointed out that OPEC+ only achieved about two-thirds of its planned production increase in May, so this gap will likely persist in June and July. Analysts also indicated that as refineries complete maintenance, crude oil demand will enter a seasonal peak (usually reaching its peak in May), coupled with healthy refining margins stimulating crude oil processing rates, all of which will provide short-term support for oil prices. However, as the impact of US tariff policies gradually emerges and non-OPEC supply accelerates, this support may fade by the end of the year . The report expects that the average price of Brent crude oil will be $57.5 per barrel in the last two quarters of this year, and will further decline to $55 per barrel in the first half of next year. Meanwhile, Goldman Sachs, which also believes that crude oil demand will slow down by the end of the year, expects in its Sunday report that the pace of OPEC+ production increases will only continue until August. The investment bank had previously expected OPEC+ to pause production increases after July. Daan Struyven and other Goldman Sachs analysts pointed out that the current fundamentals of spot crude oil are relatively tight, and factors such as global economic activity data exceeding expectations and seasonal summer demand support continued production increases. Therefore, by July 6, when the August production level is decided, the extent of the demand slowdown at that time may not be enough to halt the pace of production increases. Goldman Sachs now believes that in the face of production increases from non-OPEC+ oil-producing countries and the impact of the global economic slowdown in Q3 this year, OPEC+ will maintain existing capacity quotas unchanged from September , although "the risk of continued production increases still exists." Analysts maintain their forecast for an average Brent crude oil price of $60 per barrel for the remainder of this year, with a further decline to $56 in 2026. Why are oil prices still rising today? As of press time, following OPEC+'s official announcement of July production increase targets last Saturday, Brent crude oil futures jumped nearly 3% on Monday. (Source: TradingView) The core reason for the oil price increase is the drone strike launched by Ukraine against a Russian airbase . Additionally, the market had already priced in the production increase news last week, which also contributed to Monday's price increase. Stephen Innes, managing partner at SPI Asset Management, interpreted the situation, saying, "Crude oil trading seems to have suddenly realized the existence of geopolitical risks... Russia is being strategically provoked, and the market should prepare for strong retaliation." Innes also stated that OPEC+, which once had the core mission of defending oil prices, has now shifted to a production-first strategy—weaponizing crude oil to punish quota violators, squeezing US shale oil producers, and currying favor with Washington, all "like dancing on the edge of a fiscal cliff." He pointed out, "If Saudi Arabia is playing the long game, they are betting that the current oil price decline will be the cost of future market control."

SMM May 16 News: Metal Market: As of the midday close, domestic base metals fell across the board. SHFE zinc dropped 0.97%, SHFE aluminum fell 0.54%. SHFE lead declined 0.62%, SHFE copper edged down slightly, and SHFE tin fell 0.2%. SHFE nickel dropped 0.24%. In addition, alumina fell 2.94%, lithium carbonate dropped 2.88%, silicon metal fell 2.77%, and polysilicon dropped 3.45%. The ferrous metals series all fell, with iron ore dropping 0.95% and stainless steel declining 0.27%. Rebar and HRC both fell 0.77%. In the coking coal and coke sector: coking coal fell 3.05%, and coke dropped 1.73%. In the overseas metal market, as of 11:42 a.m., LME metals showed mixed performance. LME copper and LME tin edged up slightly, while LME aluminum edged down slightly. LME tin edged up slightly, LME lead fell 0.6%, LME zinc dropped 0.28%, and LME nickel rose 0.29%. In the precious metals sector, as of 11:42 a.m., COMEX gold fell 0.36%, and COMEX silver dropped 0.32%. Domestically, SHFE gold rose 0.75%, and SHFE silver increased 0.72%. As of the midday close, the most-traded contract for the European Containerized Freight Index fell 5.65%, closing at 1,697.9 points. As of 11:42 a.m. on May 16, the midday futures market movements for some contracts were as follows: 》SMM Metal Spot Prices on May 16 Spot and Fundamentals Iron Ore: This week, the imported iron ore market surged significantly before pulling back slightly. On Monday, the "Joint Statement of the China-U.S. Geneva Economic and Trade Talks" was released, with both sides agreeing to significantly reduce bilateral tariff levels, each retaining a 10% tariff. Since February, market sentiment regarding tariff wars had improved significantly, stimulating a sharp rise in iron ore futures. Subsequently, an accident occurred at a Peruvian iron ore company's port facility, requiring 4-5 months of repairs, raising market concerns about future supply reductions and pushing iron ore prices to highs again. However, ... 》Click for details Macro Front Domestic: [Announcement] The State Council Information Office will hold a press conference with Chinese and foreign journalists titled "Strivers on the New Journey" at 3:00 p.m. on Tuesday, May 20, 2025. Representatives from the civil affairs system will meet and exchange views with Chinese and foreign journalists on the theme of "Fulfilling the Mission of Civil Affairs and Enhancing People's Well-being." The People's Bank of China conducted 106.5 billion yuan in 7-day reverse repo operations today, with an operating interest rate of 1.40%, unchanged from the previous rate. As 77 billion yuan in 7-day reverse repos matured today, a net injection of 29.5 billion yuan was achieved. [Export-Import Bank of China: Medium and Long-Term Manufacturing Loans Exceeded 180 Billion Yuan from January to April] Data released by the Export-Import Bank of China today showed that from January to April, the bank disbursed over 180 billion yuan in medium and long-term manufacturing loans. As of the end of April, the outstanding balance of medium and long-term manufacturing loans was 1.8 trillion yuan, with a focus on supporting the export of manufacturing products such as ships and construction machinery. The bank also actively met the full-cycle financial needs of technology-based enterprises, fully supporting the construction of a modern industrial system. [Cui Dongshu from CPCA: China's power battery installations reached 54.1 GWh in April, up 52.8% YoY] Cui Dongshu, Secretary General of the China Passenger Car Association (CPCA), released an analysis of the lithium battery market for new energy vehicles (NEVs) in April. In April, China's power battery installations reached 54.1 GWh, down 4.3% MoM and up 52.8% YoY. Among them, ternary battery installations were 9.3 GWh, accounting for 17.2% of total installations, down 7.0% MoM and 6.3% YoY. LFP battery installations were 44.8 GWh, accounting for 82.8% of total installations, down 3.8% MoM and up 75.9% YoY. From January to April, China's cumulative power battery installations reached 184.3 GWh, up 52.8% YoY. Among them, cumulative ternary battery installations were 34.3 GWh, accounting for 18.6% of total installations, down 15.9% YoY. Cumulative LFP battery installations were 150.0 GWh, accounting for 81.4% of total installations, up 88.0% YoY. (Cailian Press) ► On May 16, the central parity rate of the RMB exchange rate in the inter-bank foreign exchange market was 7.1938 RMB per US dollar. US dollar: As of 11:42, the US dollar index extended its decline from the previous trading day, falling by 0.16% to 100.65. Data released by the US Department of Labor showed that the US Producer Price Index (PPI) for April rose 2.4% YoY, lower than expected and the previous reading, marking the third consecutive month of slowing growth and the lowest since September last year. The PPI fell 0.5% MoM in April, the largest decline in five years. The continued cooling of the US PPI largely reflects a decline in corporate profit margins, indicating that US companies are absorbing some of the impact of tariff increases and have not yet passed them on to consumers. In addition, US retail sales growth slowed sharply in April as the boost from households rushing to buy cars before tariff implementation faded, while US consumers cut spending in other areas amid uncertainty about the economic outlook. US Fed Governor Barr said the economy was on a solid footing, but trade disputes were casting a shadow over the outlook. Macro: Today, data to be released include China's total electricity consumption for April (monthly), the preliminary monthly rate of US building permits for April, the preliminary annualized total of US building permits for April, the monthly rate of the US import price index for April, the annual rate of the US import price index for April, the annualized total of US housing starts for April, the preliminary May University of Michigan consumer sentiment index for the US, the Eurozone's seasonally adjusted trade balance for March, the preliminary QoQ seasonally adjusted real GDP growth rate for Japan in Q1, the preliminary QoQ seasonally adjusted nominal GDP growth rate for Japan in Q1, the preliminary QoQ seasonally adjusted annualized real GDP growth rate for Japan in Q1, New Zealand's inflation expectations for the next two years in Q2, and New Zealand's inflation expectations for the next year in Q2. Crude Oil: As of 11:42, crude oil futures dropped slightly, with both WTI and Brent crude falling by 0.03%. Oil prices fluctuated rangebound, supported by optimistic sentiment about the global trade situation, but pressure was exerted by the return of Iranian supply to the market. The International Energy Agency (IEA) stated that despite lower forecasts for US shale oil production, the growth rate of global oil supply this year will be faster than previously expected, as Saudi Arabia and other OPEC member countries cancel production cuts. In its monthly report, the IEA said it expects global oil supply to increase by 1.6 million barrels per day this year, an increase of 380,000 barrels per day from previous forecasts. (Webstock Inc.) Spot Market Overview: ► Spot premiums/discounts surged after contract rollover, with overall market activity rebounding. [SMM North China Spot Copper] ► [SMM Analysis] Supported by fundamentals and sentiment, iron ore prices are expected to continue rising next week. Updates on other metal spot market reviews will be available later. Please refresh to view.

On Thursday local time, the International Energy Agency (IEA) slightly raised its forecast for global oil demand growth this year, as the impact of US tariff policies on the global economy was not as severe as previously anticipated, and low oil prices also boosted demand. The IEA currently expects global oil demand to grow by 740,000 barrels per day (bpd) in 2025, with total demand averaging 104 million bpd, up from a previous forecast of 726,000 bpd growth. A report released by OPEC the day before showed that it expects global oil demand to increase by 1.3 million bpd in 2025. OPEC began gradually increasing production in April, and combined with Trump's tariff hikes, this led to a significant pullback in global oil prices. During European trading hours on Thursday, WTI crude oil futures prices plunged 3.6% to $60.58 per barrel, while Brent crude fell 3.7% to $63.66 per barrel. This was due to market optimism about the prospects of a potential nuclear deal between the US and Iran, as well as a recent increase in US crude oil inventories. Earlier this week, the world's two largest economies, China and the US, announced a trade agreement and agreed to mutually reduce tariffs, easing fears of an economic recession and driving oil prices to rebound from recent lows. However, lingering uncertainties surrounding future trade negotiations have limited further upside room. In its monthly report, the IEA reiterated its forecast of a significant global oil supply surplus next year, expecting global oil supply to increase by 1.6 million bpd in 2025 and 970,000 bpd in 2026. In its previous report last month, the agency had forecast global oil supply growth of 120 bpd and 960,000 bpd for this year and next, respectively. The IEA believes that supply growth from non-OPEC+ countries will be robust, with daily production expected to increase by 1.3 million bpd this year, though it is expected to rise by only 820,000 bpd next year, as US shale oil production will be impacted by low oil prices. "The decline in oil prices has prompted some shale oil producers to cut spending and activity levels, with more production cuts expected in the coming quarters," the IEA said. OPEC+ is expected to increase daily production by 310,000 bpd in 2025 and a further 150,000 bpd in 2026. The alliance has agreed to increase oil supply by 411,000 bpd in June, accelerating the pace of supply recovery for the second consecutive month, raising concerns about potential oversupply in the coming months. However, the IEA pointed out that only Saudi Arabia has the capacity to significantly increase production. Meanwhile, tighter US sanctions on Venezuela and Iran may reduce the scale of the supply surplus. IEA data shows that in April, despite increased sanctions pressure, Iran's production remained strong, while Venezuela's production was hit the hardest, with daily output falling by 130,000 bpd from the previous month.

SMM, May 16: Metal Market: Overnight, metals in both domestic and overseas markets showed mixed performance. LME zinc and LME aluminum both fell by over 1%, with LME zinc down 1.41% and LME aluminum down 1.17%. The percentage changes of other metals were all within 1%. The main alumina futures contract rose by 0.17%. The ferrous metals series collectively declined, with iron ore down 0.75%, HRC and rebar both falling by over 0.2% (rebar down 0.29%, HRC down 0.21%). In the coking coal and coke sector, coking coal fell by 2.48% and coke by 1.22%. In precious metals, overnight COMEX gold rose by 1.74% and COMEX silver by 1.07%. Domestically, SHFE gold rose by 1.22% and SHFE silver by 1.02%. As of the overnight market close at 6:45 a.m. on May 16 》Click to view SMM Futures Data Dashboard Macro Front Domestic Developments: On May 15, the State Council convened a meeting to advance the work of strengthening the domestic economic cycle. Li Qiang, member of the Standing Committee of the Political Bureau of the CPC Central Committee and Premier of the State Council, emphasized at the meeting that the strategic foothold of development should be placed on strengthening the domestic economic cycle, leveraging its inherent stability and long-term growth potential to hedge against uncertainties in the international cycle, thereby promoting steady and sustained economic growth in China and striving to achieve high-quality development. Li Qiang pointed out that a domestic demand-led and internally circulated economy is a unique advantage of a large economy. Efforts should be made to place strengthening the domestic economic cycle in a more prominent position in accelerating the construction of a new development paradigm. The General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Continuously Promoting Urban Renewal Actions." The opinions propose advancing the renovation of old urban residential communities, steadily promoting the renovation of dilapidated housing, accelerating the demolition and renovation of Category D dilapidated housing, strengthening the renovation of urban infrastructure, and advancing the construction of new-type urban infrastructure. The central government's fiscal support should be provided for the implementation of urban renewal actions, and various financial institutions are encouraged to actively participate in urban renewal on the premise of compliance with laws and regulations, risk controllability, and commercial sustainability. US Dollar: After the US released a series of economic data overnight, the US dollar index fell by 0.26%. This data included an indicator measuring consumer health, which showed that retail sales growth slowed in April as the uncertain economic outlook affected consumer confidence. Data released on Thursday showed that US producer prices (PPI) unexpectedly fell in April, and retail sales growth also slowed. A report earlier in the week showed that consumer price increases in April were lower than expected. The US Department of Commerce stated that retail sales rose slightly by 0.1% last month, with the March increase revised up to 1.7%, while economists had expected no change. The previously reported retail sales growth for March was 1.5%. The increase in retail sales in March was partly due to the advance purchase of goods such as automobiles ahead of the US tariff hikes. Recent remarks by Fed officials suggest that the US Fed needs more data to determine the impact of tariff announcements on prices and the economy before adjusting its policies. In his comments on Thursday, Fed Chairman Powell did not focus on monetary policy or the economic outlook, but he stated that, given the inflation experience of the past few years, Fed officials believe they need to reconsider the key factors surrounding employment and inflation in their monetary policy approach. Fed Governor Barr said that the economy is on a solid footing, with inflation moving toward the 2% target, but trade policy has introduced uncertainty into the outlook. The market expects the US Fed to cut interest rates only by September. (Wenhua Comprehensive) Other Currencies: The US dollar fell 0.73% against the Japanese yen to 145.68 yen; the British pound rose 0.23% to $1.329, as the UK economy grew more strongly than expected in early 2025. Macro: Today, data to be released include China's annual and monthly electricity consumption for April, the initial monthly rate of US building permits for April, the initial annualized total of US building permits for April, the monthly rate of the US import price index for April, the annual rate of the US import price index for April, the annualized total of US housing starts for April, the initial value of the University of Michigan's consumer sentiment index for the US in May, the eurozone's seasonally adjusted trade balance for March, the initial quarterly rates of Japan's seasonally adjusted real and nominal GDP for Q1, the initial value of Japan's seasonally adjusted annualized quarterly rate of real GDP for Q1, New Zealand's inflation expectations for the next two years in Q2, New Zealand's inflation expectations for the next year in Q2, and more. Crude Oil: As of the overnight close, oil prices in both markets fell together, with US crude dropping 2.31% and Brent crude falling 2.22%, both recording two consecutive days of decline. This was due to market expectations that Iran would release more oil into the global market. SEB analyst Ole Hvalbye said, "Any immediate lifting of sanctions due to a nuclear deal could bring 800,000 barrels per day of Iranian crude oil supply to the global market, which is undoubtedly negative for oil prices." John Kilduff, a partner at Again Capital in New York, said, "We are in a state of flux. Either President Trump will bring Iran to zero or integrate them into the international community. Therefore, the threat to supply is two-way. Either some Iranian oil will continue to flow into the market, or we will reap the full benefits of Iranian oil restrictions. This is what is affecting oil prices." Meanwhile, the International Energy Agency (IEA) has revised its forecast for oil demand growth in 2025 upwards to 740,000 barrels per day (bpd), 20,000 bpd higher than its previous projection, citing upward revisions to economic growth forecasts and lower oil prices that will support consumption. However, economic headwinds, coupled with record-high EV sales, are expected to reduce global oil demand growth for the remainder of 2025 from nearly 1 million bpd in Q1 to 650,000 bpd. "Signs of a slowdown in global oil demand growth may have already emerged." The agency has revised its forecast for global oil supply growth in 2025 upwards to 1.6 million bpd, an increase of 380,000 bpd from the projection in last month's report, as more optimistic production prospects in Saudi Arabia offset the expected slowdown in US shale oil production amid low oil prices. It has also revised its forecast for global oil supply growth in 2026 upwards from 960,000 bpd to 970,000 bpd. The IEA stated that a significant increase in supply, far exceeding demand growth, will lead to an average increase in oil inventories of 720,000 bpd this year. (Comprehensive report from Wenhua)