Week Ending November 21

WTI, now trading on the January prompt contract, settled lower this week as geopolitical developments weighed on sentiment. Crude ended Friday at $58.06, down from $60.09 the previous Friday.

Prices tested monthly lows amid ample global supply and increasing speculation of a potential Ukraine–Russia peace agreement. Traders are evaluating the likelihood of a deal that could further add barrels to an already saturated market. Although Ukraine and several European allies rejected key elements of the proposed terms, markets appear to be pricing in some probability of an agreement.

The U.S. has reportedly pressured Kyiv to accept the proposal—viewed by many as skewed favorably toward Russia—threatening to withdraw support if they do not. President Donald Trump stated he would maintain recently enacted sanctions on Russia (effective Friday the 21st) even as discussions continue. Those sanctions have likely been one of the few supportive factors for crude prices recently. According to Bloomberg, roughly 48 million barrels of Russian crude are currently stranded on tankers with no clear destination due to U.S. restrictions.

The prospect of a peace deal threatens to reverse that tightening effect. If sanctions are relaxed or workarounds are permitted, those displaced barrels could re-enter a market already oversupplied.

Current forward curve levels present a difficult hedging environment for producers. Many clients remain undecided on whether to further de-risk at current prices.

We continue to view downside risk as more significant than upside through 2026. Previously, our largest bullish risk factor was meaningful disruption to Russian supply—which has technically occurred—but it resulted in only a marginal price uplift. Initially, some Russian barrels became commercially unavailable as buyers (e.g., India) explored alternatives; however, historical precedent suggests those volumes typically find a home eventually.

These latest developments—where the U.S. appears to be encouraging Ukraine to accept a peace deal—pose additional risk that sanctioned barrels could return to market. If an agreement is reached, or even if negotiations show meaningful progress, expect crude prices to move lower.

The December Henry Hub contract settled higher for the fifth week, with prices remaining near recent highs above $4.50/MMbtu. Gains were mostly limited to the front of the curve, as Summer ’26 and Winter ‘26/’27 finished the week mostly flat. This week also marked the first reported net-withdrawal from storage in the EIA’s weekly inventory report.

Near-term prices continued to strengthen as the demand outlook for December looks strong. Currently, Lower-48 population-weighted temperatures are above the ten-year average, but a cooler pattern is expected to impact the US towards the end of November and heading into December. This should lead to increased gas demand and larger draws from storage. Outside of the next two weeks, temperatures may remain cooler than average. Commodity Weather Group currently forecasts the month of December to be materially colder than normal, potentially being the ninth coldest December of the past 25 years. While long-range weather forecasts often lack accuracy, anticipation of a potentially cooler December may be helping to support gas prices.

This week, the EIA reported a -14 Bcf withdrawal from storage, the first net-withdrawal of the Winter ‘25/’26 season. This resulted in the storage surplus to the five-year average shrinking to the lowest level since early summer, with inventories now 146 Bcf above average. We expect inventories to continue tightening to the five-year average this winter, assuming ten-year average weather, primarily driven by continued strength in LNG feedgas. Our modeling shows storage levels falling below the five-year average and ending winter about 130 Bcf below average. This should support gas prices in 2026.