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 what effects the current backwardation, geopolitical tensions, and more will have on the oil markets this summer.

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 with me today.

DENTON CINQUEGRANA: Hey, Laura. How are you?

SANICOLA: Yeah. Good. Thanks. So oil markets are kind of back to a normalized pattern right now. Futures are down thirteen percent year to date. But when we look ahead, the picture gets a little bit more confusing. Can you let us in on what’s going on?

CINQUEGRANA: Yeah. And I think what you’re kinda talking about is the backwardation that we currently see in the market where the current contract is more expensive. Basically, the price today is higher than the price tomorrow.

Well, with all the OPEC production coming back, with non-OPEC production growing, whether that’s US shale, Brazil, Guyana, other places around the world that are increasing output, that market is actually you know, the market is kinda waiting for a flip into backwardation where the price tomorrow is more expensive than the price today. Haven’t seen that yet, but a lot of the investment banks who, you know, cover this stuff extensively are starting to believe that maybe by the end of the summer, we start to see the first instances of that. But, yeah, right now, if you take the prompt July WTI contract, it’s worth three dollars more than than January 2026. The expectation is with more production coming online, who knows what happens with the economy and if there’s a dip in demand that way, yeah, we could see this market flip around relatively quickly.

SANICOLA: Right. It’s definitely looking challenging. That said, the past week, oil has been kind of resilient, despite the fact that, as you said, the market should sort of be in a state of oversupply this year, and it’s been moving up on, you know, more trade talks between the US and other countries like China. Does that mean that there’s maybe some more support to the market than we’ve considered, or where is it coming from if so?

CINQUEGRANA: Yeah. No. I think you’re right about that. I think the market is, you know, under sixty too low. We’re we’re starting to find a little bit of a sweet spot here in the sixty two, sixty three area. Several times over the past several days, WTI is trying to get to sixty four and just stops just short of that. So I think the market is kinda hitting a little bit of a a comfort zone.

Now we still have geopolitical tensions out there. Obviously, Russia, Ukraine, Iran, US, which we’ve talked about in the past. But, yeah, I think there’s that. There’s that oversupply that we think is coming just simply hasn’t arrived yet. So I think the market overdid it to the downside, but it’s really showing, you know, kind of a resilience like you said, but it’s also restraint from getting too far out of whack to the upside.

SANICOLA: Right. Now I wanna end by talking about the pictures for oil refiners. I know OPIS data is showing that refining profit margins, which have generally been pretty strong as we’ve written about, they did take a dip last week. Is this related to something temporary, or is it something refiners should start to be concerned about?

CINQUEGRANA: Yeah. I think with the way it’s going, you know, things were starting to get back and look like a normal summer, you know, kind of refining margin. Well, right now, diesel’s more expensive than gasoline in the futures market and in multiple spot markets throughout the United States.

Yes, We did take a dip. There was some pretty bearish data from the Energy Information Administration in regards to gasoline inventories really kinda building. Now still below last year in the US, still below the five year average, which some people really like to look at. But, you know, for the most part, I think you had to see another week or two of similarly bearish data before, you know, you run for the exits. But right now, it’s one week. Maybe it was just a quirk, but something to keep an eye on going forward.

SANICOLA: I’m sure they will be heading into hurricane season as well. Alright. Well, thanks so much for joining me, Denton, and thanks everyone for watching. We’ll see you next week.