OPIS Insights

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

This week’s video discusses the heavily bearish oil market. We reveal the troubling surge in crude stored on the water — a glut not seen since 2020 — and discuss the real risk of WTI prices hitting the mid-$50s. Plus, discover the one major bright spot for consumers ahead of the holidays!

Transcript:

LAURA SANICOLA: Hi, everyone. This is Laura Sanacola, 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: Hey, Laura. It’s been a couple weeks, so happy December.

SANICOLA: Yes. Happy December. And, can we find a bullish voice in the room for oil? Because all of the positive sentiment, and there wasn’t that much to begin with, about, you know, maybe in the latter half of next year, supply demand balances will normalize. Like that’s all drifted away and everything seems pretty doom and gloom. What are you hearing?

CINQUEGRANA: Yeah, no, it seems hard to find a bull out there today. And obviously for the last couple of months as a lot of the investment houses and big analysts come out with their 2026 forecasts, and there’s just no one who sees anything sort of bullish. Obviously, geopolitical tensions still remain. That could be something that spikes, but to me, and this data is a little over a month old, so who knows where it currently stands. But you look at the commodity futures trading commission data and a net short in WTI futures and options, that screams to me that if there’s some sort of event that’s a catalyst, you could see a pretty sharp round of short covering. But other than that, yeah, it’s hard to find anything that might be bullish.

SANICOLA: I was looking for our main item today in the newsletter on the oil majors at ship tracking data and intelligence. And according to intelligence firm Kipler, the volumes on the water of crude oil where they’re stored and kind of used as price arbitrage has swelled to the highest level since 2020. So that’s obviously when demand was very low and folks were storing oil on the water waiting for, you know, price signals to to trade. Do we just have too much oil? Was it do are we or is the US producing at record levels still? I’m pretty sure it is. But what what’s happening here?

CINQUEGRANA: Yeah. And again, demand has grown in 2025. It’s grown somewhere in between where some of the big forecasts have been and where some of the small forecasts, so call it about a million barrels a day, which is kind of on point with recent years, either side of a million. But I think until, and we’ve been hearing much about a glut for what, four or five, almost six months now, I think until that oil on the water starts to find its way into storage tanks, that’s when the market’s going to start to see its real fall.

Right now, just looking at this yesterday so far, and we still have several weeks left in the fourth quarter on WTI and Brent, the range between the low and high trade have only been about seven or eight dollars That’s a really tight spread for a quarterly average. So something to keep an eye on, but if some of these barrels that are on the water end up in storage tanks, yeah, then you could see, yeah, I don’t want to say the bottom to fall out, but then we really kind of reestablished ourselves in the mid fifties for WTI and probably the upper fifties, either side of sixty for Brent, if not even lower.

SANICOLA: And as I noted in the newsletter this week, the oil majors, they’re able to still make money in the low sixties. They’re able to cover their dividends using free cash flow. The fifties is a bit of another story than they’ve got to borrow a bit more. Everybody’s balance sheets pretty strong, but it certainly changes the numbers a little bit for those who, you know, hold the equities. And there is one bright spot, I guess, which is for folks like you and me, the consumers. How has this trickled down into fuel markets?

CINQUEGRANA: Yeah. Retail gasoline prices nationally in the US have dropped below three dollars a gallon. Current average is right around two dollars and ninety eight cents, several cents below, where it was at this time last year, about eight or nine cents below where it was at this time last year. So again, not a huge difference, but again, it’s disinflationary right now. Obviously, heading into the holidays, that’s obviously a good thing, especially when energy is one of the largest inputs when you’re when we’re talking about inflation. Lower gas prices are going to help keep some of that inflation data a little bit at bay. So obviously heading into the holidays, this is good news for drivers and those that are looking to get out on the road.

SANICOLA: All right. Well, we’ll catch up later this month and see if we, we see a swelling of inventories, a sign that, you know, things are getting pretty dire. And thanks everybody for joining. We’ll see you next week.