OPIS Insights

Barron’s Managing Editor Daren Fonda and OPIS Chief Oil Analyst Denton Cinquegrana discuss what’s ahead for oil this week.

Watch this week’s episode for insights into how the markets are reacting to the government shutdown.

Transcript:

DAREN FONDA: This is Daren Fonda, managing editor with Barron’s. I’m here with Denton Cinquegrana, chief oil analyst at OPIS. How are you, Denton?

DENTON CINQUEGRANA: Hey, Daren. Good to see you.

FONDA: So let’s start a little bit with the government shutdown. There’s been lack of data and it seems that the market is flying blind a little bit. Can you talk about where you see the markets now and how the markets are sort of reacting to this data vacuum?

CINQUEGRANA: Sure. Well, it’s a little bit of a mixed bag here because we are still getting weekly supply and demand data from the Energy Information Administration. Back in 2018, the last time we did have a government shutdown that lasted for about 34, 35 days. I can’t remember which exactly it was.

But the EIA didn’t miss a beat on their weekly releases, so that’s good. We at least have that to rely on. Now the Commodity Futures Trading Commission, they’re currently not releasing data. So we have no idea about the positioning that’s been taking place over the last well, really since the government shut down. So, maybe half of the way maybe flying with one eye open is a better way to describe it.

FONDA: Yeah. Maybe not flying blind. But the markets just seem to be stuck with crude, WTI, and Brent pretty much in the sixties. Yeah. Very range bound. Do you see anything that would trigger a breakout in either direction?

CINQUEGRANA: Yes. And like you said, we’ve been really kinda stuck in a range for much of the past three months. Two weeks ago, it looked like we were starting to break out a little bit to the upside. That was very short lived. Even last week, we started to break down towards the downside and kind of pop back into this range. I think the catalyst or the next step, I should say, is gonna be lower. We might see WTI drop into the fifties. Now we’re priced in the sixty one, sixty two area.

That’s not some great, you know, prediction or anything like that, but we are expecting to see a glut of oil come into the market over the course of the fourth quarter and into 2026. You have OPEC adding more barrels to the market. You also have refining maintenance coming up here in the US in the northern hemisphere as we get ready for the winter season. Last week, the EIA had refinery utilization rates over ninety percent. That’s a little bit high for this time of year. So gotta think those maintenance planned maintenance, at least, is coming in the next week or two.

FONDA: Yeah. Some some Wall Street banks have been cutting their estimates for Brent for 2026. I think Citi came out with an estimate of sixty one to sixty three for next year, which is similar to what Goldman has and some other big banks. That seems to be the consensus forecast. Meanwhile, OPEC has been gradually releasing more barrels into the market, but this notion that there’s five million barrels a day of spare capacity that OPEC could unleash at any time seems to be just dying that they’re they are not going to be releasing nearly as much as feared.

CINQUEGRANA: Yeah. And, again, the 137 that they announced recently for November matched what they said for October. And, obviously, as more barrels come back into the market, your spare capacity decreases. And spare capacity just can’t flip a switch if something happens to come on. You bring that oil to the market. It does take a little bit of time. But, again, something happens, then we could see prices break out to the upside, a spike in demand, or more of the geopolitical events take place. Obviously, the deal struck between Hamas and Israel remove some of that geopolitical risk premium that we’ve seen in the market. But the next step is certainly gonna be lower, for oil prices probably into the fifties. You might even see Brent get down into the fifties, but it might be short lived.

FONDA: Okay. Thank you so much, Denton.

CINQUEGRANA: Thank you.