OPIS Insights

Barron’s Senior Energy Writer Laura Sanicola and OPIS Chief Oil Analyst Denton Cinquegrana discuss what’s ahead for oil this week.

Watch this week’s episode for insights into the reasons behind OPEC and the IEA’s diverging oil supply and demand forecast.

Transcript:

LAURA SANICOLA: Hi, everyone. This is Laura Sanicola, author of Barron’s Energy Insider, and I’m here today with Denton Cinquegrana, chief oil analyst at OPIS. Denton, thanks for joining me.

DENTON CINQUEGRANA: Thanks, Laura. Good to see you again.

SANICOLA: You too. So OPEC and the IEA are out again with diverging oil supply and demand forecast. Surprise, surprise. Feels like we talk about this every month. Give us the lowdown on how they’re looking at supply demand balances going forward.

CINQUEGRANA: Yeah. The two groups are on just on two completely different pages. You have the IEA saying demand growth in 2025, about 737, call it 750 thousand barrels a day for nice round even numbers. Meanwhile, OPEC is at 1.3 million barrels a day. So, really, the truth probably lies somewhere in between. The IEA is calling for just a huge surplus for 2025 of 2.7 million barrels a day. I just don’t know if that’s gonna materialize like that.

SANICOLA: Right. And why is that? Because of the economic data you’re looking at or what are traders telling you? What do you think?

CINQUEGRANA: I think it’s a little bit of both, but also the fact that IEA is playing up or using the increases in OPEC+ production that have been announced monthly. Most recently, they announced a 137 thousand barrel a day build for October. But, again, some of these barrels just don’t seem to be materializing at least into OECD storage tanks. They’re showing up perhaps more in China and in floating storage. So I think until you start to see the US and Europe and, you know, other developed countries see their oil inventories start to really grow, I think this market is gonna remain resilient and kind of in this low sixty-ish range for WTI and, you know, mid to upper sixties for Brent. It’s gonna take a little bit of time, but I do still believe the next step for oil prices is lower.

And I think, you know, that really should take place as refinery maintenance for the fall starts to come into play. So you’re gonna have to wait until probably late September, early October. If you just go from August to September, you know, looking at it historically, WTI and Brent, it’s been pretty mixed. You know? Some years, it’s up. Some years, it’s down a couple bucks. So, September is probably a little too soon to expect a real drop in oil prices.

SANICOLA: Alright. Thanks so much, Denton, for breaking that down, and thanks everyone for joining us. We’ll see you next week.