Week Ending October 17

WTI lifts from five-month low, but bears still in control amid supply glut

WTI edged up slightly from a five-month low on Friday, with the November contract closing $0.08 higher at $57.62/bbl after three straight days of losses tied to concerns over a deepening supply glut. The modest rebound did little to change the broader trend, as supply growth continued to outpace demand and renewed trade tensions clouded the global outlook.

The supply narrative remained dominant. According to OPEC’s October Monthly Oil Market Report, the group has lifted production by roughly 1.99 MMBbl/d through September since beginning its supply unwind, though nearly 470 MBbl/d of pledged barrels have yet to return. Despite OPEC’s slower-than-promised output recovery, the broader supply picture remains heavy.

The IEA’s latest Oil Market Report projects global crude supply to exceed demand by about 4 MMBbl/d in 2026, reflecting the combined effect of a steady OPEC+ recovery and sustained non-OPEC growth. Together, agency forecasts point toward a persistent oversupply extending well into next year.

In the US, fundamentals painted a similarly soft picture. Commercial crude inventories rose by 3.5 MMBbl last week, marking the third consecutive build and pushing stocks to their highest level since early September. Domestic crude production climbed to a new record of 13.64 MMBbl/d, up 7 MBbl/d from the prior week, even as the number of active oil rigs declined for a second straight week. Overall, the data reaffirm a market where production momentum continues to outpace demand recovery.

The geopolitical backdrop further influenced sentiment. As US–China tensions persist, President Trump signaled a potential softening in trade policy, calling high tariffs “not viable.” He also announced plans to meet Russian President Vladimir Putin “within weeks,” raising speculation that renewed dialogue could eventually pave the way for additional Russian supply to re-enter global markets. Meanwhile, India may soon reassess sourcing after Trump claimed Prime Minister Modi vowed to halt Russian purchases, a move that could redirect flows toward Middle Eastern barrels.

Taken together, this week’s data and developments underscore a market still struggling to find balance. Production growth across OPEC+ and the US remains robust, inventories are trending higher, and forward fundamentals point to a sustained surplus into 2026. Temporary draws in China and maintenance-related declines at Cushing offer little relief against the broader supply overhang. While geopolitical uncertainty may inject bouts of volatility, the structural imbalance remains intact. AEGIS maintains a bearish outlook.

November Henry Hub slides to multi-year low, with prices below $3/MMbtu

The prompt NYMEX natural gas contract fell for a second week, with prices settling below $3/MMbtu. Forward prices also settled lower, with the Winter ‘25/’26 strip losing 10c to settle at $3.62/MMbtu and Summer ’26 down 6c to $3.74/MMbtu. This week’s selloff came despite supply levels remaining low and LNG feedgas hitting new records, likely driven more by expectations of continued weakness in near-term weather-driven demand.

A new record in US LNG feedgas demand was recorded this week, reaching 18.22 Bcf/d on Sunday. While volumes moderated in the following days, inflows into export plants still averaged 17.94 Bcf/d. This is despite several Gulf Coast facilities still running below their maximum capacity. Over the next month, export volumes should continue to climb to new records as existing facilities run near capacity and the new Golden Pass LNG export plant starts up. In addition to flows at Golden Pass ramping up, reaching 9 MMcf/d this week, The relatively new Plaquemines LNG plant hit record levels of around 3.7 Bcf/d.

Gas supply remained low for the second week, according to modeled data from S&P. Lower-48 dry gas production was modeled at an average of 105.63 Bcf/d, compared to 105.59 Bcf/d last week, and 107.23 Bcf/d in the week of October 2. This is believed to be due to maintenance on pipes in the Northeast and Permian, although it can be difficult to accurately determine Permian production levels due to the amount of intrastate pipelines where gas flows are not publicly available.

Higher LNG demand and lower supply was not enough to lift prompt gas prices, with it appearing that the market may be more focused on near-term weather-driven demand and expectations of high storage levels. This October has been one of the warmest of the past 20 years, delaying the start of heating season.