Global oil markets are facing a period of short-term pressure as production swells, but Canadian energy fund manager Eric Nuttall says the groundwork is already being laid for the next major bull market in crude.
Speaking to BNN Bloomberg, Nuttall, a partner at Ninepoint Partners, said he remains bearish on oil for the remainder of 2025 as inventories rise and new supply comes online. But he expects a powerful reversal in 2026 as the market absorbs spare OPEC+ capacity and balances the influx of new production from South America.
“We have a surge of OPEC production between now through September,” he told Bloomberg. “We’ve got the normalization and the end of that voluntary deal. That’s 1.2 million barrels per day that the market is having to absorb. There’s been a mismatch between the increase in production from OPEC in the increase in exports, because during the summertime, a lot of countries, namely Saudi burn oil for air conditioning. Well, that’s coming to an end.”
Brent crude was trading up 1.66% at $66.88 per barrel on Wednesday at 1:13 p.m. ET, while West Texas Intermediate (WTI) was trading up 1.60 at $63.35 per barrel. At these levels, Nuttall said oil equities are fairly valued, with greater near-term opportunity in natural gas. He highlighted Calgary-based Expand Energy as a preferred play, citing free cash flow yields of 14% and a dividend above 3%.
The short-term headwinds are significant. OPEC has added more than 500,000 barrels per day of crude to the market this month as it rolls back voluntary cuts, with Saudi Arabia reducing direct burn for power generation at the end of summer. Nuttall estimates the market must now absorb an additional 1.2 million barrels per day of OPEC supply. Sanctions on Russian crude continue to support a risk premium, preventing traders from going fully bearish, but inventories are expected to build from September as refineries enter maintenance season.
Beyond OPEC, new offshore projects are shifting the balance. An ExxonMobil-led consortium in Guyana has lifted output to over 900,000 barrels per day following the startup of a fourth floating production unit. In Brazil, BP has reported its largest oil and gas discovery in 25 years, with full development expected to add hundreds of thousands of barrels daily.
With new supply pushing against softer demand, Nuttall expects inventories to swell through late fall. But he insists the cycle is setting up for a sharp turn higher in 2026, when the “seeds of the next bull market” take root.
By Charles Kennedy for Oilprice.com
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