Barron’s Energy Insider | In Partnership with OPIS | Video – November 25, 2024

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

Transcript:

LAURA SANICOLA: Hi. This is Laura Sanicola, author of Barron’s Energy Insider newsletter, and I’m here today with my colleague, Denton Cinquegrana, chief oil analyst at OPIS. Denton, again, I wanna talk to you this week about geopolitical conflicts. The last couple weeks we’ve talked, it’s been about tensions in the Middle East moving oil up one to three dollars per barrel. This time, it’s Russia and Ukraine, and both countries have launched ballistic missiles at each other. Given that Russia is one of the world’s largest crude oil exporters, why is the market not reacting more than it is?

DENTON CINQUEGRANA: Yeah. It’s a good question, and then thanks again for having me. And like you said, we’ve switched our focus from the Middle East here to now Russia, Ukraine, with the two countries lobbing missiles at one another. Yeah. The price reaction has been relatively muted. Crude oil for WTI has got to a back to around 70 dollars a barrel, but not much more than that.

I think part of it is you still have this demand, component that people are still kinda worried about. China demand still still a concern. You see the International Energy Agency, even OPEC are continuing to reduce their demand growth expectations. So I think demand is the real concern here. Now granted, if Ukraine decides to lob a few more missiles, have an impact on Russian oil production, we’re talking about a different story here.

SANICOLA: Is this why we’re seeing reports that OPEC again might delay bringing oil production back online? Originally, they were planning to bring some on December first. That’s been pushed back and now could potentially be into twenty twenty five.

CINQUEGRANA: Yeah. I think that question is a function of the the previous one where, hey, we’re still concerned about demand here. We’re still concerned about demand. Supply still seems to be okay even, you know of course, if there’s some sort of supply disruption, then, again, we we have to kind of redo the math a little bit.

SANICOLA: I wanna end by talking a bit about energy policy. Trump has picked, the Liberty CEO, Chris Wright, to head up the Department of Energy. He’s a fracking executive. And we’re fortunate at Barron’s that my colleague Avi got an interview with him last year where he outlined his views on a number of things, including climate change. You know, not denying that man made climate change is occurring, but arguing to Avi that it won’t be as big of a crisis as climate scientists currently say due to things like more air conditioning use throughout the world. In your view, what do you think has picked signals about how energy policy might shift during the next administration and how it might benefit frackers?

CINQUEGRANA: Yeah. So, again, we’ve heard over and over again drill, baby, drill. Well, we are drilling, baby, drilling. So, but I do think with with the new administration, look at permitting and and and maybe more federal lands being open. That’s where I see the potential impacts here. Little bit easier to start producing more oil on more land potentially, should we need to go up to, you know, 14, 15 million barrels a day of production. We’re already over 13 million barrels a day. United States is the largest producer of oil and natural gas in the world. I think another factor here with the energy secretary nomination is liquefied natural gas and LNG. I think we might see more of that build-out continue that was paused under the Biden administration. So, again, for producers of of oil and natural gas, I think this is a good sign for them. I think you’re gonna have some some friends within the administration, if you will.

SANICOLA: Alright. Thanks so much again, Denton, and we’ll see everyone next week.