US oil output growth to slow despite Trump’s ‘drill, baby, drill’ plan

Today’s agenda: Commerzbank-UniCredit meeting; OpenAI struggles to price Microsoft stake; JPMorgan boosts Dimon’s pay; Big Read on “ag-tech” in Australia; and what happened to the Trump “resistance”?

Good morning. We close the working week with a look at Donald Trump’s ambitions for a new oil boom. Despite the president’s call to “drill, baby, drill”, new data shows total US oil output is expected to rise more slowly in his second term than it did under Joe Biden.

‘Drill, baby, drill’, explained: American energy dominance was a key part of Trump’s election campaign. After being sworn in this week, he signed executive orders to “unleash” new oil and gas supplies and moved to eliminate Biden-era regulations that drillers said increased costs and restricted activity. He also called on the Opec cartel to slash oil prices in a video address to Davos yesterday. Trump is betting that a big jump in oil supply can beat back US inflation by making goods and fuel cheaper.

Why might it flop? After two decades of soaring growth and sometimes punishing volatility, Wall Street could be reluctant to fund another drilling binge. Lower oil and gas prices make shale companies less profitable — and less likely to follow Trump’s command to “drill, baby, drill”. Some shale producers are also concerned that the best locations have already been tapped after more than a decade of breakneck exploration across states such as Texas and North Dakota. Here’s more on why Trump’s plans may not match the reality on the ground.

• Lex on oil: Our flagship investment column has further analysis on why a shale boom is not Trump’s gift to give. (Premium)

• Trump on interest rates: The president piled pressure on the Federal Reserve to cut borrowing costs yesterday.

• Immigration: A federal judge has blocked Trump’s executive order denying US citizenship to children born in the country to unauthorised immigrants.

Sign up for our White House Watch newsletter for the latest updates on the new Trump administration. Here’s what else we’re keeping tabs on today and over the weekend:

• Economic data: The US, UK, Eurozone, France and Germany have preliminary purchasing managers’ indices today.

• Elections: Greece holds presidential elections tomorrow, while a poll in Belarus on Sunday is expected to further cement Russia’s grip on the country.

• Davos: The World Economic Forum’s annual meeting closes today with a panel featuring BlackRock chief Larry Fink, IMF director Kristalina Georgieva and European Central Bank president Christine Lagarde. Follow the FT’s live events.

• Middle East: Israel and Lebanon are in talks through mediators to extend the ceasefire between Israel and Hizbollah by 30 days when it expires on Sunday.

• Results: American Express, Burberry and Verizon report.

Claer Barrett, writer of the Sort Your Financial Life Out newsletter series, discusses how to invest for success in 2025 at 12.30pm GMT today. Don’t miss it.

Five more top stories

1. Exclusive: Commerzbank’s chief shot down an invitation from her UniCredit counterpart to hold informal talks about a potential tie-up, according to people familiar with the situation. Bettina Orlopp has instead insisted on receiving a written proposal after she met Andrea Orcel in London in November. We have more details from their conversation.

2. Exclusive: OpenAI’s board is struggling to price Microsoft’s stake as the start-up looks to become a for-profit company. The maker of ChatGPT, which is overseen by its not-for-profit board, has been discussing a restructuring since September that would split the start-up in two. The charitable arm could be valued at about $30bn, but a final price is yet to be determined. Read the full story.

• Stargate: The high-profile AI project unveiled by Trump this week will exclusively serve OpenAI, people familiar with the matter told the Financial Times.

3. JPMorgan Chase boosted longtime chief Jamie Dimon’s pay to $39mn last year, his largest remuneration at the US bank. The 8 per cent pay rise comes after the bank’s record annual profits last year and was roughly double the bump Dimon received in 2023.

4. Exclusive: UK ministers are exploring scrapping promised stricter audit rules for private companies as the government seeks to dial back regulation in a bid to boost economic growth. The business secretary and employment minister have met big auditors and investors to discuss watering down or axing reforms that would designate about 600 companies “public interest entities”.

5. The Bank of Japan has raised short-term interest rates to “around 0.5 per cent”, the highest level in 17 years. The well-signalled move followed weeks of speculation over whether governor Kazuo Ueda would wait for stronger evidence of rising Japanese wages and sustainable inflation. Here’s more on the BoJ’s efforts to “normalise” monetary policy.

How well did you keep up with the news this week? Take our quiz.

Big Read

Agricultural technology — often called “ag-tech” — has been dubbed the new green revolution. More than $200bn of investment has been poured into the sector globally in the past decade, funding attempts to grow crops, rear animals and create food more efficiently and sustainably. Australia, a country on the frontline of climate change, has become an ag-tech hotbed, trialing innovations ranging from experimental fungi to “robotic bees”.

We’re also reading . . . 

• Transatlantic Gen Z gap: While millennials across the west were united in their economic malaise, their successors are not, writes John Burn-Murdoch.

• ‘Technoking’ Trump: The president is surrounded by leaders of the richest and most powerful companies, writes John Thornhill, but their dominance may yet be checked.

• Panama Canal: Panamanians who lived through the 1989 US invasion fear Trump’s threats over Chinese interests in the strategic waterway.

• Trump ‘resistance’? Disorganised and dispirited, those opposed to his policies have grown unexpectedly quiet.

Chart of the day

A record-breaking run has propelled US equities to their most expensive level relative to government bonds in a generation and pushed price-to-earnings valuations ahead of stocks in other regions. “There are quite a few red flags here that should make us a bit cautious,” said one analyst.

Take a break from the news . . . 

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