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 effects of the U.S. cracking down on sanctions on India as well as record oil production in the U.S. and where fuels could go from here.

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 OPIS. Denton, thanks for being with me this week.

DENTON CINQUEGRANA: No problem, Laura. How are you?

SANICOLA: Good. So let’s talk oil. You know, there were a ton of headlines this week that I thought theoretically would send oil prices higher. The biggest one being the US cracking down on sanctions on India, a major buyer of Russian oil under the last administration. We kind of looked the other way on India buying Russian oil at a discount as Western countries put sanctions on Russian oil because, you know, India’s a strong trading partner and it kept prices low globally to have oil flowing throughout the world, even from Russia. Now with the headline, I guess we would have assumed maybe prices would go higher, but they didn’t. Can you break down why that is?

CINQUEGRANA: I think they did a little bit at first, but I think we also saw a little bit of profit taking come in and kinda knock WTI at least back from the seventy dollar perch. Still close enough to it, but it did come back a little bit. I do think one of the things about the the sanctions and kind of the enforcement well, one, it’s gonna be difficult to enforce also, but it’s Russian, it’s refined products derived from Russian oil. So, again, gonna be difficult to prove that someone’s, you know, importing this illegal products, but it doesn’t go into effect until January 21st, which to me is an odd date. I think that should, you know, feel like January first would be the appropriate one, but here we are. January 21st is when it goes into effect. So we still have several more months. Negotiations could take place.

We also have president Trump really kinda pushing Russia and Ukraine to cease fire, moving up that deadline from beginning of September to really, you know, by August ninth.

SANICOLA: Another headline that kind of works in the opposite direction for oil, US crude oil production hitting another record high this week. Permian producers have been cutting rigs since April or early May, so I think the fact that we’re still producing at records is a little bit surprising. What do you make of it, and where do you think oil and fuels go from here?

CINQUEGRANA: Yeah. Conventional wisdom would tell you that less rigs means less oil, but we’re not seeing that, at least not yet. This is May data that we’ve been looking at. So we still have June and obviously July to go. So you might start to see some of that take place. But to me, the next step for oil prices is is probably lower. You have one US production remaining, you know, if you wanna call it stubbornly high, you know, but like staying staying high.

As you mentioned, the record production, you have more OPEC production coming to the marketplace. And then, you know, August hasn’t been kind to oil and refined products markets in years past. And also once you get into September, you hit one of those shoulder months when demand starts to to move lower. And that’s why I think you see a lot of the investment banks and a lot of those who forecast supply and demand expect to see supplies build in the last three, four months of the year.

All right. Well, thanks for breaking down those headlines with me and thanks everyone for joining. We’ll see you next week.