Kpler’s Matt Smith on oil price forecast: The risk is to the upside

Kpler’s Matt Smith on oil price forecast: The risk is to the upside

oil prices on track now for their first weekly gain in four weeks as markets assess the impact of higher for longer interest rates the Energy Information Administration lowering its Price Forecast for Brent to just slightly over $84 per barrel this year joining us right now is Matt Smith he’s an analyst for Kepler good morning to you morning so here we are in the summer we get the and and in a political season where we’re going to get the billboard that is the price of gas wherever we go what’s it going to look like between now and November well there’s going to be a lot of unknowns but but really we’re in a very steady all price environment here around that kind of $85 level you’ve kind of got the bullish argument that we’re going into summer Refinery runs are going to be super strong drawing down inventories on the flip side of things refining margins are edging kind of low a little bit differentials for physical prices are fairly soft and so that kind of leaves us around this kind of 85 level OPEC has come in and essentially put a floor under prices but the demand to the upside is really kind of limited did so he was stuck in the 80s okay we’re stuck in the 80s but you were you were giving the bullish case and the bearish case which side are you on uh not not as bullish as as the as a lot of people are and so yeah we expect we could see a little bit the risk is to the upside and we could see if you think the risk is to the upside not to the downside though correct yes okay so what is the downside risk at this point in the ball game very limited because you you you’ve had that OPC meeting last week it was first interpreted as bearish but they had three tranches of production cuts they rolled two over until the end of next year uh the third one they said maybe we’ll start to unwind at the end of Q3 if we really need to or if we can and so really we’re just stuck in this kind of trading range right now in ter but the risk to the upside you say is higher so that’s good you would think if you’re a bull for who yeah right for Bulls yeah well for Bulls question well and right for the customer it’s not so much correct but what do you think that upside looks like uh fairly limited so what that number uh we could get up to 90 but but uh we we’ll come back down again so we’re not going to 95 by no means are we going to $100 a barrel here so if you were a company that has to hedge uh these prices you actually would do nothing right just write it out right now this sort of an easy this is sort of an e easy play but every time it looks easy something happens right so what are you worried about uh the election coming up right you could have some type of interference there you the Biden Administration as you say are so focused on that price of the pump right now they’re in a in a good situation in that we’re around $350 a gallon there so not a concern from that sticker shock as you drive past that gas station every day uh but you know the the concern is that you you see maybe the Saudis or OPC or something like that keeping barrels off the market saudi’s going to be doing that over the summer here because they use a lot of crude for direct direct crude burn essentially for power generation so their exports are going to drop and so there is the potential that that that’s oh so you sort of buy into the idea do you believe that Saudi basically wants a trump Administration and therefore is going to be trying to push up the price of oil I mean do you do you buy into that sort of theory I’m suggesting that if they wanted a trump Administration they could do things to support prices and do you think that they will do you think that they are I think that they need to keep oil off the market anyway they need to reduce their exports uh to being compliant with the deal going forward here

Matt Smith, Kpler lead analyst, joins ‘Squawk Box’ to discuss the state of the oil market, oil price trend forecast, and more.