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Jason Schenker

It's Going to Be a Hot Summer for Oil Prices

Futures still don't reflect what's likely to be a record driving season.


Photographer: Justin Sullivan/Getty Images

Oil prices have been falling since the New Year. After a bullish announcement from the Organization of Petroleum Exporting Countries and production cuts by non-OPEC nations, the narrative has become bearish, focused on drilling for U.S. shale oil, as well as the failure of some nations to observe calls to cut output.

Yet market participants are missing something fundamental: WTI futures and energy equities have not priced in the potential upside risks to oil prices during the 2017 U.S. summer driving season, which is likely to be record-breaking. And that season -- roughly the period between late May and early September -- is approaching on the New York Mercantile Exchange much more quickly than it is in real time. NYMEX contracts trade ahead of the calendar, so higher prices may be closer than they appear.