Week Ending November 28

Crude softens as surplus builds and peace signals trim risk premiums

Crude prices softened this week as the market confronted a mix of bearish supply data and shifting geopolitical expectations. WTI traded near $58/Bbl for most of the week, with pressure driven by renewed optimism surrounding Russia–Ukraine peace negotiations and a series of fundamental indicators pointing toward a deepening global surplus. As inventories rose and US production hit fresh records, traders continued to pull risk premiums out of the front of the curve, weighing on prices.

The EIA reported a larger-than-expected +2.774 MMBbl build in crude-oil inventories. This week’s Petroleum Supply Monthly deepened the bearish tone, revealing that US crude production reached a fresh record above 13.8 MMBbl/d in September, roughly 350 MBbl/d higher than the agency’s weekly estimates. Meanwhile, product demand softened as the summer driving season ended: gasoline demand fell to 8.952 MMBbl/d from August’s 9.226 MMBbl/d, jet fuel demand eased to 1.71 MMBbl/d, and diesel demand held essentially flat at 3.77 MMBbl/d. The combination of rising supply and cooling product consumption underscores a domestic market moving decisively toward surplus.

These US dynamics mirror broader global trends. The EIA still expects worldwide supply to grow 2.8 MMBbl/d in 2025 and another 1.4 MMBbl/d in 2026, contributing to large inventory builds across OECD countries.

Geopolitically, crude markets responded to increasing momentum behind a potential Russia–Ukraine peace agreement. Negotiators described progress as meaningful, and several reports suggested revised terms were under serious review. A ceasefire or partial sanctions relief would not add new Russian crude, but it would improve flow efficiency by reducing compliance risk, lowering shipping friction, and restoring access to traditional buyers. With Russian oil on the water already up 17% since August, any normalization would effectively increase supply availability at a time when inventories are rising.

Together, the inventory build, record U.S. production, softening product demand, and de-escalation signals from Eastern Europe weighed on crude prices throughout the week. With physical supply expanding and geopolitical risk premiums fading, the market continues to tilt toward softer prices and a flatter forward curve. Unless OPEC+ intervenes more forcefully or demand rebounds, crude is likely to remain under pressure heading into 2026.

Natural gas production and LNG feedgas reach new records

The January Henry Hub contract advanced this week, with prices trading near $4.75/MMbtu. While the front of the forward curve moved higher, the later-dated tenors remained flat from last week. Prices mainly gained on an improved outlook for near-term demand as weather forecasts for December continue to look colder than the ten-year average. Outside of weather, significant changes occurred in underlying fundamentals as dry gas production reached a new record high as well as LNG feedgas demand.

Last week, Lower-48 weather forecasts showed temperatures modestly cooler than average, but this week saw forecasts shift even colder. In addition, it appears the colder pattern will remain in place for at least the next two weeks based on the latest European Ensemble model. This should further support weather-driven gas demand and result in larger withdrawals from storage.

Dry gas production reached a new record high this week, with output above 109 Bcf/d, according to S&P data. While supply has ramped up, it has mostly matched increases in LNG feedgas demand which also reached new records this week. Inflows into US export plant totaled more than 20 Bcf/d. Feedgas demand should remain high this winter and likely increase further as Golden Pass LNG begins to ramp up Train 1.

AEGIS continues to expect the supply-demand balance to tighten this winter and heading into Summer 2026.