Crude Oil Down Over 2%; Upstart Shares Jump Following Earnings

The global oil market has been volatile in recent weeks, with crude oil prices experiencing a decline of over 2% on Wednesday. Meanwhile, Upstart (UPST), a leading lending technology company, saw its shares surge following the release of its earnings report. This article will delve into the factors driving these market movements and explore the growth opportunities for Upstart in the personal loan and new product categories.

Crude oil prices have been on a rollercoaster ride, with geopolitical tensions, supply chain disruptions, and shifts in demand contributing to the market's volatility. The recent decline in prices can be attributed to several factors, including:

1. Increased global production: Oil production outside of OPEC+ has been strong, offsetting the increase in global oil consumption. In 2024, production by countries outside the group increased by 1.8 million barrels per day (b/d), while OPEC+ members reduced production by an estimated 1.3 million b/d. This trend is expected to continue in 2025, with production growth outside of OPEC+ remaining strong before waning in 2026.
2. Growth in North and South American production: The United States, Canada, Guyana, and Brazil have led the increase in global oil production over the last two years. These four countries alone increased their total liquids production by a combined 1.1 million b/d in 2024 and are expected to increase their production by an additional 1.0 million b/d in 2025 and 0.9 million b/d in 2026.
3. Slower demand growth: Global oil demand growth is set to accelerate from 840 kb/d in 2024 to 1.1 mb/d next year, but this increase is dominated by petrochemical feedstocks, while demand for transport fuels continues to be constrained by behavioral and technological progress. Non-OECD demand growth, notably in China, has slowed markedly, which contributes to the overall slower demand growth.
4. OPEC+ production cuts: OPEC+ members have agreed to voluntary production cuts to prevent prices from falling further. However, these cuts have been delayed several times, adding uncertainty to the global supply outlook. The latest agreement in December 2024 shifted the timeline for relaxing some of the cuts, but the uncertainty about when the unwinding of the cuts will actually start remains.
5. Geopolitical tensions: Heightened geopolitical tensions have raised potential supply risks, which could impact oil prices. However, the market is closely assessing these tensions and evolving OPEC+ supply dynamics, which may offset the impact on prices.



Upstart's share price surge following its earnings report can be attributed to several key drivers:

1. Strong Results and Guidance: Upstart handily beat expectations on both the top and bottom lines, with revenue surging by 56% year over year and the company reporting a profit on an adjusted basis, compared to a loss in the same quarter a year ago. This strong performance indicates that the company's business model and strategies are working effectively.
2. Improved Loan Platform Activity: Upstart's loan platform was far more active than many had expected, with 68% year-over-year growth in loan volume to $2.1 billion, and a dramatically improved conversion rate. This indicates that the company's underwriting model and risk management strategies are working well, allowing it to originate more loans while maintaining profitability.
3. Positive 2025 Guidance: Upstart's 2025 guidance was far better than investors had anticipated. Management expects about $1 billion in revenue, which would be the company's highest ever, and to not only grow adjusted earnings but to be "at least breakeven" on a generally accepted accounting principles (GAAP) net income basis. This positive outlook suggests that the company's growth trajectory is strong and that it is well-positioned to continue its success in the coming years.
4. Growth Opportunities in Personal Loans and New Product Categories: Upstart has significant room to grow its personal loan origination business, as the personal loan market is estimated to be about $155 billion in size, and Upstart's annualized volume is about $8 billion. Additionally, Upstart's auto loans and home equity lines of credit (HELOCs) could be the most important growth drivers, with these two loan types combined for just over 3% of Upstart's volume in the fourth quarter but growing at 61% and 59%, respectively, over the past quarter alone.

In conclusion, the recent decline in crude oil prices has been driven by increased global production, slower demand growth, OPEC+ production cuts, and geopolitical tensions. Meanwhile, Upstart's share price surge following its earnings report can be attributed to strong results and guidance, improved loan platform activity, positive 2025 guidance, and growth opportunities in personal loans and new product categories. As the global energy market continues to evolve, investors should keep a close eye on these trends and the potential for Upstart to capitalize on its growth opportunities.