Oil prices to break US$70 this quarter?

Key Concepts

• Inventory Builds
• Seasonally Weak Period
• Winter Demand Increase
• Oil Price Projections (North of $70, $80s in H2 2026)
• Buying Opportunity (Late Q4)

Market Dynamics and Inventory

The current market is characterized by observed inventory builds within the data. This is occurring during a seasonally weak period that precedes winter.

Winter Demand and Price Impact

• Demand Surge: Once winter commences, typically in mid-November, early December, or January, demand for oil is projected to increase significantly. This increase is estimated to be between 1 million to 1.3 million barrels per day, spanning the shoulder season and the winter season.
• Price Sensitivity: If the average daily oil production remains around 105 million barrels, this winter demand surge will have a notable impact on oil prices at the margin.

Oil Price Projections

• Winter Outlook: The speaker anticipates oil prices to trade "north of $70" during the winter period.
• Mid-Term Outlook (H2 2026): Looking further ahead to the second half of 2026, the projection is for oil prices to reach the "$80s."

Investment Strategy: Buying Opportunity

• Timing: The speaker's view is that a "buying opportunity" for oil is likely to emerge sometime during the fourth quarter (Q4), with a specific emphasis on "late Q4."

Synthesis/Conclusion

The current market is experiencing inventory builds during a seasonally slow period. However, an anticipated significant increase in oil demand during the upcoming winter is expected to drive prices above $70. Looking towards the latter half of 2026, prices are projected to climb into the $80s. Consequently, the speaker identifies a potential buying opportunity for investors in late Q4.