a gallon of gas?  RBC energy guru on why we should get higher oil prices

$8 a gallon of gas? RBC energy guru on why we should get higher oil prices

American consumers may have gotten a bit of a break from sky-high gas prices over the past few months as oil and natural gas prices in the US have risen since earlier this year.

But any US consumer who thinks $5-a-gallon gasoline is a thing of the past might want to listen to Helima Croft, head of global commodities strategy at RBC Capital Markets.

During a panel titled “$8 a Gallon Gas?,” Croft told MarketWatch editor-in-chief Mark DeCambre that she believes global oil and natural gas prices could rise later this year as Russia escalates the conflict in Ukraine and sanctions the Western in full force.

“We should be preparing for an escalation,” Croft said in response to a question about Russian President Vladimir Putin’s decision to announce a partial mobilization of reserves on Wednesday – the latest sign that Russia is escalating the conflict. in Ukraine after its latest military difficulties. .

Accompanying the promotion was another round of nuclear sparring.

Look: Markets ignore Putin’s nuclear saber. Why that might change.

“We should be preparing for more disruption to the energy markets in December,” Croft said, highlighting December 5 – the date when the waiver of sanctions on energy-related payments made to the Russia expires — as a potential inflection point.

But before that happens, American consumers and oil traders will also have to contend with another issue: the end of releases from the US Strategic Petroleum Reserve. In the last few months, the United States has been supplying 1 million barrels of oil per day to the global energy market.

“The question is will there be additional releases?” Croft said. “And when do we start buying oil back?”

Croft was joined on the panel by Alexandra Pruner, senior adviser at Tudor, Pickering, Holt & Co, an energy-focused investment bank. Discussing the impact of the strong US dollar on oil and gas prices, Pruner said American energy companies have shown “deep capital discipline” in returning cash to shareholders.

Recently, oil traders have made money by “phasing” the bounce in crude oil prices that followed Russia’s invasion of Ukraine. But Croft said investors may be underestimating Putin’s efforts to increase crude oil and natural gas exports in Europe.

“Losing for Putin has not only professional consequences. It can also have personal and survival consequences,” said Croft, a former intelligence analyst with the Central Intelligence Agency. “Perhaps losing is not an option for Putin.”

So far, Russia’s most recent promotion has been to tackle crude oil. After rising earlier in the day in response to news of Putin calling for backup, West Texas Intermediate crude futures CLX22,
+0.29%
for November delivery finally settled at its lowest level in two weeks on Wednesday.

Look: Oil prices fall on third weekly rise in US crude supplies, as Fed agrees to another rate hike

But the rise of Russia is not the only factor that could push oil prices higher.

“Any indication that China is lifting those lockdown restrictions and I would be an oil buyer,” Croft said.

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