OPIS Insights

Watch: 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 expectations for renewable diesel demand as well as potential diesel supply issues as the US heads into the heart of hurricane season.

Transcript:

LAURA SANICOLA: Hi everyone. This is Laura Sanicola, author of Barron’s Energy Insider. And I’m here today with Denton Cinquegrana, Head of Oil Analysis at Opus. Denton, thanks for being with me this week.

DENTON CINQUEGRANA: Hey, Laura. How are you?

SANICOLA: Good. So we’re finally getting a glimpse at refiner earnings and oilfield services have also reported. I know refining is your specialty. What are executives guiding about future profits and where they see supply and demand headed from here?

CINQUEGRANA: Yeah. So Valero was one of the major refiners who just came out with their earnings. Kind of parsing through the transcripts, it seems like they were really positive about diesel and diesel margins.

Diesel demand has looked pretty solid so far this year, so that’s an indication that the economy is still on pretty strong footing. The one thing that kind of stood out to me is that they did not have a very good second quarter when it comes to renewable diesel. And it didn’t seem like they’re that confident that it’s gonna turn the corner anytime soon. They still need some clarity as far as, you know, the renewables and biofuels are concerned from the EPA. So right now it’s really kind of clear as mud.

SANICOLA: Right. And we’re covering that in this week’s Barron’s Energy Insider, thinking that perhaps the uplift for renewable diesel producers will be in the more distant future out 2026 and beyond.

In terms of other things impacting oil markets right now, we’re in a bit of a lull. What are you seeing are the main drivers of markets right now?

CINQUEGRANA: Yeah, well, kind of the summer doldrums here a little bit. We’re getting to the tail end of the summer driving season, but the fact that the Phillips 66 Bayway refinery returned last week really kind of put some good pressure, downward pressure on refining margins in the futures market on the crack spreads. Basically, the party’s over right now. Earlier, couple days ago, gas diesel had its highest crack spread of 2025. It’s really kind of come off from there. Gasoline’s come off several dollars as well. I mean, they’re still good and okay, but they’re well off the the highs and, you know, really kind of the expectation was that these things were gonna kind of take off here in the second half of the summer, and I don’t think that’s necessarily gonna be the case now.

SANICOLA: Right. And, we have still low stocks of diesel across the US and across Europe as well, but it doesn’t really seem to be nudging crude oil prices any which way, which usually indicates to me that maybe it was more of a supply problem with diesel than it was a demand push, shall we say?

CINQUEGRANA: Yeah, no, absolutely. It was concerns with diesel supplies, even though diesel inventories, at least in the United States have built over the last couple weeks. According to the EIA, we’re still very well below where we might normally be at this time of year. Gasoline, on the other hand, pretty comfortable right around where the five year average for for this time of year.

So, there’s no shortages of gasoline anywhere that you might see a little pocket here of tightness in some spots in the country. But for the most part, the real concern, supply wise is diesel. We are in hurricane season. There’s been a couple storms. Fortunately, nothing that have would have impacted, Gulf Coast refining operations, but it’s certainly something to keep an eye on as we get deeper into the summer.

SANICOLA: All right. Thanks so much, Denton. And we’ll keep an eye on earnings as they come along. Thanks everyone for joining. We’ll see you next week.