Financial Services Operators

Bearish oil thesis yet to play out

After geopolitically driven price volatility, fundamentals starting to point to oil being oversold

byEnverus

CALGARY, Alberta (July 2, 2025) — Enverus Intelligence® Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS company that leverages Generative AI across its solutions, has released its latest Fundamental Edge report.

EIR’s report focuses on the outlook for oil and gas prices driven by supply and demand fundamentals, as well as the impact from OPEC actions, global oil demand, U.S. natural gas price outlook and the Iran-Israel conflict.

“Our bearish patience is wearing thin. Where are the stock builds? The demand weakness? The material OPEC supply adds? OECD crude and product stock levels have remained largely flat since the beginning of the year. Markets are not well supplied, as some observers state. We think oil markets are balanced,” said Al Salazar, report author and director at EIR.

“We find the recent Henry Hub move over $4/MMbtu somewhat unnerving. Weekly storage injections are ~2.0 Bcf/d over and above what the weather alone would indicate. At this pace, gas storage in place would easily exceed 4.0 Tcf by the end of October. Clearly something has to give.”

Key takeaways from the report:
• We take issue with talk of geopolitical premiums on the price of Brent. Indeed, oil prices spiked and faded in response to threats on oil supply and subsequent U.S. action. However, the U.S. SPR remains some 200 MMbbls below prior maximum levels, while OECD crude and product stocks remain close to 5-year lows. These two factors suggest Brent should have been pricing in the low 80s high 70s – prior to the Israeli strikes. Markets had discounted oil prices to the lead up to the Israel/Iran war, based on tariff fears and OPEC supply. Both bearish factors have disappointed to date.
• Should there be no signs of sustained oil demand weakness over the summer driving season and if OPEC supply additions continue to underwhelm – EIR will need to reconsider its bearish $65/bbl rest of year Brent price view.
• EIR maintains its NYMEX Henry Hub gas price forecast. We forecast prices will average $3.60/MMBtu this summer and $3.85/MMBtu in the winter. However, aggressive storage injections place downside risk to our near-term gas price call.

You must be an Enverus Intelligence® Research subscriber to access this report.

About Enverus Intelligence® Research:
Enverus Intelligence ® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. Enverus is the most trusted, energy-dedicated SaaS company, with a platform built to create value from generative AI, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 95% of U.S. energy producers, and more than 40,000 suppliers. Learn more at Enverus.com.

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