Oil prices remain under pressure this year as fears of oversupply weigh on markets, even as inventories sit below five-year averages. Analysts say the short-term weakness could give way to a stronger outlook once production plateaus and global demand stabilizes.
BNN Bloomberg spoke with John Stephenson, founder and oil and gas analyst at Granite Point Research, who said declining U.S. shale output and limited OPEC capacity could tighten supplies over time, while natural gas offers better short-term opportunities amid seasonal demand shifts.
Key Takeaways
- Oil has seen three straight months of declines amid worries about oversupply and seasonal refinery maintenance reducing crude demand.
- OECD oil inventories remain below five-year averages, suggesting limited evidence of a true supply glut.
- OPEC+ continues to boost output modestly, but analysts see spare capacity nearing exhaustion as U.S. production peaks by 2027.
- Canadian natural gas prices have been weak, but LNG Canada’s ramp-up should ease the glut and improve pricing by early next year.
- Gold’s fundamentals remain strong, supported by central bank buying, a weaker U.S. dollar and expectations for rate cuts.
Read the full transcript below:
ANDREW: Oil can’t seem to catch a break this year. Prices have slid amid concerns about excess supply. We’re joined now by John Stephenson, oil and gas analyst and founder of Granite Point Research. John, great to see you again.
JOHN: Great to be here.
ANDREW: Thanks for coming to visit us in our new studio. Tell us about oil — do you see much prospect of a turnaround?
JOHN: Longer term, yes. I think it’s actually a very exciting commodity and, in many ways, the one to watch because things have gotten so washed out. I think we’re really ready for a turn. What’s led to this has been a few things — an announcement by OPEC+ that it plans to bring on 137,000 barrels a month for about seven or eight months, and persistent worries that OPEC will keep expanding production, creating a glut. Recently, the U.S. Energy Information Administration said to look for crude to remain under pressure. But when you look at the physical market, there’s no real evidence of that. So while financial markets are reacting, the data doesn’t show a true glut materializing.
ANDREW: Eventually, OPEC will stop adding barrels to the market. And I know we could debate how many of those extra barrels they say they’re going to produce are actually real. Last I checked, to echo your point, there wasn’t a big uptick in OECD oil inventories.
JOHN: No, in fact, they’re below five-year averages. If you look at OECD inventories, they’re below the normal range. We’ve seen a big draw in the U.S. in terms of oil and gas stocks. Overall, the story looks somewhat bullish. Fundamentally, the largest oil producer in the world is the U.S., and even the Energy Information Administration has said production will peak in 2027 — not too far away — before heading into a decline and then levelling off. Production has gone from about nine million barrels a day to 14 million, and it might edge up a bit before falling back to 10 or 11 million, or even lower, post-2027. That coming decline will be very supportive for oil prices.
ANDREW: In the short term — four to six months — you favour natural gas over crude, though?
JOHN: Yes, I think so. Natural gas in Canada has had a rough go — even going negative at times and sitting under $1 for much of the month. A lot of that’s weather-driven, and we don’t yet have enough offtake for the gas, which is a problem. But LNG Canada is ramping up, with full capacity expected in the first quarter of next year. That should help bleed off some of the excess inventory.
ANDREW: There’s optimism for natural gas because of AI data centres, but that’ll take a while. You can’t even, apparently, in some cases get turbines because of such high demand.
JOHN: That certainly adds to the demand story. Overall, natural gas is a good story. If we get more normal weather, that will be positive for gas. Short term, investors are probably better served in natural gas, as an average winter would help. But longer term, oil is setting up very well for investors, six months and beyond, because of the decline in traditional basins. You see that all over — in Russia, South America, Mexico and the U.S. The traditional players that supply most of the world’s oil are peaking. The only country with room to expand production is Canada.
ANDREW: Keep hitting record highs.
JOHN: Keep hitting record highs — and we’ve got all these self-inflicted wounds with legislation that makes it difficult to get oil out of the ground and to market. If we can move past that, it would be huge for us.
ANDREW: We’re tight for time. John, gold has come off the boil. Perhaps it was a crowded trade pushing it above $4,200. Would you be a buyer of gold or gold stocks right now?
JOHN: I think you’re okay wading in. The fundamentals remain solid — strong central bank buying, a weak U.S. dollar, all of which support gold. So I think you’re fine getting in.
ANDREW: John, thank you very much indeed.
JOHN: You’re welcome.
ANDREW: John Stephenson, oil and gas analyst and founder of Granite Point Research.
---
This BNN Bloomberg summary and transcript of the Oct. 30, 2025 interview with John Stephenson are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
