Forming and Defending a Commodity Price View in an Interview

Introduction

"Where do you think oil prices are going?" is one of the most frequently asked questions in energy investment banking interviews, and one of the most feared by candidates who have not prepared for it. The question is not a trick, and the interviewer is not expecting you to predict the exact price of oil six months from now. What they want to see is that you have an informed, nuanced view grounded in supply-demand fundamentals, that you can identify the key variables, and that you can connect the price outlook to its implications for energy deal flow. This article provides the framework for forming and defending a commodity price view that impresses energy interviewers.

Every commodity price answer should cover four elements.

A price range, not a point estimate. Saying "I think oil will be $72" invites immediate challenge. Saying "I think Brent will trade in the $65-80 range by year-end 2026, with the wide range reflecting geopolitical uncertainty" demonstrates appropriate humility and analytical sophistication. The range should be narrow enough to show you have a view (not $40-100) but wide enough to reflect genuine uncertainty.

The 2-3 key variables driving your view. Identify the supply and demand factors that matter most. For oil, the critical variables in 2026 are OPEC+ production policy (the pace of voluntary cut unwinding), non-OPEC supply growth (US, Brazil, Guyana, Argentina), and demand trends (China slowdown vs. emerging market growth). For gas, the critical variables are LNG export capacity additions, AI-driven power demand, and producer supply discipline.

The risks that could invalidate your view. Every view has tail risks. For an oil view anchored at $65-80, the upside risk is sustained Middle East disruption keeping the geopolitical premium elevated above $85. The downside risk is OPEC+ losing cohesion and flooding the market, pushing prices toward $55 or lower. Acknowledging these risks shows that you think in scenarios, not certainties.

The implications for deal activity. This is the element that separates energy candidates from commodity traders. Connecting your price view to banking activity demonstrates that you understand why the question matters. At $65-75 WTI, upstream M&A continues at moderate pace (both buyers and sellers are willing to transact); gas-weighted M&A improves as the price recovery makes development economic. At below $55 WTI, upstream M&A freezes as sellers refuse depressed valuations, while restructuring activity increases for leveraged operators.

Forward Strip vs. Your View

The forward strip (futures prices for future delivery months) represents the market's consensus expectation for commodity prices. In an interview, you can reference the strip as a starting point ("The strip currently projects Brent declining from the mid-$80s to approximately $70 by year-end"), but your view should add analytical value beyond simply quoting the market. Explain whether you agree or disagree with the strip and why. For example: "I think the strip is roughly right on oil because the OPEC+ unwinding and non-OPEC growth should push prices lower, but I think the gas strip may underestimate the structural demand from LNG and data centers, which suggests Henry Hub could exceed the $3.80 strip by late 2026."

As of early 2026, the oil market presents a complex picture that you should understand in detail before walking into an interview.

The bearish case (Brent $55-65 by year-end 2026): OPEC+ resumes unwinding voluntary cuts, adding 1.2+ million barrels per day back to the market. Non-OPEC growth continues at 1.0+ million barrels per day (US, Brazil, Guyana). The Middle East geopolitical premium dissipates as tensions ease. Chinese demand continues to decelerate as EV adoption accelerates. The result is a structural oversupply of 1-2 million barrels per day that pushes inventories higher and prices lower. J.P. Morgan's base case of approximately $60 Brent reflects this scenario.

The bullish case (Brent $80-95): Middle East instability persists or escalates, keeping the geopolitical premium elevated. OPEC+ maintains production restraint to defend prices. Non-OPEC growth disappoints (Permian productivity declines, project delays in Brazil and Guyana). Strategic petroleum reserve purchases from China and India absorb excess supply. The EIA's forecast of approximately $74 Brent with ongoing supply disruption assumptions reflects a moderate version of this scenario.

A balanced view (Brent $65-80): The most defensible interview answer acknowledges both forces. "I expect the geopolitical premium to gradually erode as the market adjusts, bringing Brent back toward $70-75 in the second half of 2026. The fundamental supply-demand balance is modestly oversupplied due to non-OPEC growth, but OPEC+ retains the ability to manage the downside by pausing or reversing its production increases. The wild card is the Middle East: a sustained disruption to Strait of Hormuz flows could keep prices above $85 for an extended period."

The natural gas view is simpler to construct but equally important.

The structural thesis is bullish: LNG export capacity is growing from 15 Bcf/d in 2025 to 17+ Bcf/d in 2026 (with Golden Pass, Plaquemines Phase 2, and Corpus Christi Stage 3 ramping), while data center power demand is adding incremental gas consumption for electricity generation. These are structural demand drivers that provide a floor under Henry Hub prices.

The near-term constraint is that domestic gas production growth (approximately 1.1 Bcf/d in 2026) is keeping pace with demand additions, preventing a breakout above $4.00. The EIA projects Henry Hub averaging approximately $3.80 in 2026, with upside to $4.00+ in 2027 as additional LNG capacity comes online.

A strong gas view: "I think Henry Hub trades in the $3.50-4.50 range in 2026, supported by structural demand from LNG exports and data center power, but capped by production growth in the Marcellus and Haynesville. The longer-term trajectory is constructive: I expect Henry Hub to exceed $4.00 by 2027 as Golden Pass reaches full operations and data center gas demand continues to grow. The key risk is that renewable energy and nuclear build faster than expected, reducing the incremental gas demand from the power sector."

After you present your view, expect the interviewer to push back. This is not because your view is wrong; it is because they want to see how you handle pushback and whether you can defend a position with logic rather than retreating to "you might be right."

If challenged on the bearish side: "You said $65-80, but what if OPEC+ floods the market? Could oil go to $50?" Answer: "In a scenario where OPEC+ abandons production discipline entirely and the geopolitical premium evaporates simultaneously, $50-55 is possible but unlikely to be sustained. At those levels, US producers curtail drilling, which reduces supply within 6-12 months, and OPEC+ history shows they eventually cut production to support revenue. I would view a $50 print as a buying opportunity for quality E&P assets, not a new equilibrium."

If challenged on the bullish side: "What if the Middle East conflict escalates further?" Answer: "A major Strait of Hormuz closure that takes 15+ million barrels per day offline would push oil well above $100, but the probability-weighted impact is already partially embedded in the current geopolitical premium. I would expect the US and allies to release strategic petroleum reserves and for demand destruction to cap any sustained price above $100-110."