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 the state of global oil supply due to the tensions in the Middle East as well as gasoline demand during the summer driving season.

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 being here today.

DENTON CINQUEGRANA: Hi, Laura. Good to see you.

SANICOLA: So, obviously, a lot of folks watching the oil market are keeping an eye on the potential for, you know, direct US intervention in the Middle East and, you know, the implications for oil. Things are certainly, heating up in the region. But what can we say about this state of global supply and US supply just taking a look at crude inventories and the data that we have at hand right now?

CINQUEGRANA: Sure. Well, I think the first thing to mention is that we’ve seen no impact to global supplies as a result of everything that’s going on. However, with tensions heightened, all the banks basically agree that the risk premium in the market right now is about ten dollars a barrel.

But when you look at some of the data we’ve just seen from the Energy Information Administration, crude oil inventories dropped by quite a bit by eleven and a half million barrels for the week ending June thirteenth. You know, it was one of the bigger draws of the year, but if you look a little bit deeper, we saw a big pop in crude oil exports from the United States and a drop in crude oil imports into the United States. You take the two together, and you come out pretty close to eleven and a half million barrels a day on a week to week change.

We’ll just have to keep an eye on if that was just a one week quirk. Maybe there were some delays at some of the ports, things like that. So but for now, yeah, oil inventory’s relatively tight, but I don’t think there’s any panic yet in the United States at least as far as oil inventories are concerned.

SANICOLA: And then what about refined products? Usually, it’s a pretty good indicator on global demand gasoline, jet fuel, diesel. What are they telling us about the state of the market balance right now?

CINQUEGRANA: Yeah. With the gasoline demand and summer driving season, you know, steady steady demand, I thank you would be the best way to describe the the gasoline demand picture right now. Diesel, a little bit stronger than the week before, but the diesel price has just gone up tremendously. Right now, if I’m a refiner, my focus is on making diesel. Diesel crack spreads using the NYMEX futures, probably about thirty two, thirty three dollars a barrel, where gasoline is, you know, struggling to stay much above twenty, twenty one dollars a barrel. So right now, even though it’s considered the out of season product, diesel looks like it might be starting its kind of preseason fall rally probably a little bit early.

SANICOLA: Alright. Well, thanks so much for breaking that down. Is there anything else that if you were a refiner, you should be thinking about? We’re just about to wrap up second quarter earnings and refiners look like they’re coming out pretty okay this this quarter. I guess, what are you watching from the independent refiner side?

CINQUEGRANA: A little bit, obviously, better than the first quarter. The first quarter was, you know, not good for for lack of a better term, or a less colorful term. But, second quarter, you know, decent, not great, probably not as good as second quarter last year, but getting, you know, only about a week left of the second quarter. So getting a little bit closer, you know, it looks like right now, very similar to 2022 and 2023 or actually more 2023 and early 2024 is gonna be diesel that kinda saves the day for refiners this summer.

SANICOLA: Alright. Well, thanks so much, Denton, as always, and thanks everyone for joining. We’ll see you next week.