00:00Oil holding gains as traders weigh geopolitical tensions from Venezuela to Russia and Iran against concerns about a global glut out there.
00:08Joining us now is Regina Mayer, Global Head of Clients and Markets at KPMG.
00:13Regina, what are your clients down in the oil patch saying these days with WTI crude oil below $60?
00:19They can't be too happy about that.
00:22Well, I think they're actually planning for a lower for longer scenario, Paul.
00:26And they've baked in 60 or below into their budgets.
00:30They're hoping there's more upside.
00:32But I'm of the believer with the bulk of the analysts, EIA is even predicting $55 for Brent on average in 2026, that we do have a structural oversupply situation.
00:43I was on your show in November.
00:45I said it was about 1.5 million barrels per day excess.
00:48It's now 2 million barrels per day excess with the potential to be as high as 4 million barrels per day excess in 2026.
00:56That is a structural oversupply.
00:59Some might call it a glut.
01:00And I think that's going to be a governor on higher crude prices throughout 2026.
01:05Regina, you know, it's interesting.
01:07When we talk about energy, I used to only think of oil.
01:10But now, because of the AI push and data centers, I think of electricity, I think of natural gas, and the prices of those things are all soaring or at least moving substantially higher.
01:24Why isn't oil doing the same?
01:28Why is oil sort of stuck in the doldrums here?
01:31Well, because I think it goes back to what does this overall supply picture look like?
01:36And I am watching natural gas.
01:38It's one of my big 2026 outlooks, natural gas prices and electricity prices, which gets to the points that you were just raising there.
01:46So, Henry Hub's been trading at about $4.30 per MMBTU.
01:50It was down at $2.
01:52So, you know, we're talking about a pretty significant increase.
01:55And I've talked to some analysts that say it could get as high as $5, $6, $7 per MMBTU.
02:01Part of that is we need more natural gas for electricity generation.
02:05We've had 3% increase in electricity generation last year alone.
02:09And we've seen electric prices raise almost 5% national average in 2025, as high as 20% in some states, expected to be as high as 4%, another increase of 4% in 2026.
02:24That's hitting people in the pocketbook.
02:26So, while prices at the pump are nice, they're 20 cents lower this year than they were last year, we're seeing a lot of upward pressure on natural gas prices, which is for home heating as well, and electricity generation.
02:38And that'll affect consumers.
Comments