Crude oil prices remain steady just under the $85 a barrel mark, driven by strong demand and tight supplies.

Developments with respect to US shale are particularly interesting. After effectively subsidizing consumers through the first decade of this century with break-neck drilling that depressed global oil prices, the shale industry appears to have struck a winning formula – moderating production, limiting reinvestment in new wells and reducing debt. Crucially, executives now understand that any output growth must be carefully measured, and not take market share from OPEC and its allies, for fear of sparking repeats of the bruising price wars of 2014 and 2020.

The bottom line is that US producers are making more money than at any time since the shale revolution began over a decade ago. Free cash flow is estimated to increase by 38% next year, presuming oil prices remain elevated. Where we are seeing increased US output is within the Permian shale, which is the lowest-cost and most productive of all the US shale oil plays. Oil output in the Permian Basin is projected to hit a record of 4.95 million barrels a day in December, which surpasses the record set in March 2020,right before the pandemic.

However, overall US oil output is still a long way off from a full recovery – around 12% below where it was in February 2020 in the early days of the pandemic. That’s equivalent to removing the U.S. Gulf of Mexico’s entire output from global markets. The Democratic Party’s green agenda and anti-fracking platform has upset many in the US oil patch and the critics are now are keen to point out the irony of a president who restricted drilling at home only to ask Middle East nations and Russia to increase crude production.


Thermal coal prices are proving to be enormously resilient, with US prices in particular at their highest level in more than 12 years, which in turn is likely to help feed further into the inflationary effect of rising energy costs. It’s also interesting to look at the world’s two biggest coal-consuming nations, India and China, which are continuing to add coal-fired energy capacity at a rapid rate. Typically, new coal-fired plants would be expected to operate for at least 30 years, cementing coal’s role in the global energy mix beyond the middle of the century.


Gold is looking really solid at five-month highs, with more upside. The chart shows gold breaking out of its downward trend going back to August 2020, when it hit its all-time high of $2,073.

For much of this year, rising inflation has been bad news for gold, but now it’s giving the metal a shot in the arm. While bullion is often bought as a way to protect wealth when consumer prices are climbing, this year’s inflation had weighed on gold, as investors took the view that it would spur the Federal Reserve to scale back huge stimulus measures. But with the Fed determined to keep rates low while unemployment remains elevated, worries about out-of-control inflation are boosting gold’s allure. The latest US inflation data for October shows the 6.2% CPI rise as representing the highest rate of inflation in 30 years.

There’s also strong evidence that inflation could actually be much higher, based on alternate inflation calculations using the methodology from 1980, with inflation closer to 14% right now using that methodology, well above the 6.2% being reported.

US investors certainly seem to be voting with their feet, as World Gold Council data shows that US Mint gold coin sales this year through the month of October exceeded 1 million ounces, which is the biggest volume since 2010, and puts full-year 2021 coin sales on track to be the best in over two decades.


Aluminium has been a very good example of the volatility within the industrial metals space in terms of pricing, and we’re continuing to see more evidence of this. We’ve seen aluminium prices surge to their highest level in 13 years on the back of demand and energy-related factors, however those factors are now easing – construction demand is falling, and so too are energy prices – which means that aluminium prices have eased too. This is representative of most of the major industrial metals at present.

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