Sentiment in oil markets remains overwhelmingly negative, driven by perceived market oversupply and negative global demand indicators. Brent crude for January delivery was trading at $63.10 per barrel in Thursday’s intraday session, little changed from $62.97 a week ago while the corresponding WTI contract ticked up slightly to $58.70/bbl from $58.46. Meanwhile, the recent rally in oil product prices has cooled off, with ICE Gasoil-Brent crack dropping from a 35.84/bbl peak on 18 November to ~$26/bbl. This is partly due to the easing of panic over the delivery specification into the ICE gasoil futures contract.
Market focus remains firmly on the supply-side, with a view that any progress towards a ceasefire in Russia’s war in Ukraine could lead to easing of heavy U.S. sanctions on Russian producers. The Trump administration has drafted a new 19-point peace plan that’s far more favorable to Ukraine compared to the original 28-point plan. Some of the critical amendments in the new plan include no handover of the Donbas region to Russia for free, no automatic veto on Ukraine joining NATO in the future, and provision of Article 5-style protection for Ukraine, meaning the U.S. would be bound to intervene if Russia invades in the future. A proposal for full amnesty for war crimes that was part of the first plan has also been removed.
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China remains the leading buyer of Russian crude, with imports increasing by 275.6 kb/d over the past two months to ~2.15 mb/d. Overall, China’s crude imports have increased by 866 kb/d Y/Y to 11.44 mb/d as the country continues to stockpile crude. Rystad Energy estimates that China has stockpiled more than 1 million barrels of crude per day in some months, socking away nearly 160 million barrels in the first nine months of 2025. The buying spree has been triggered by strategic concerns like energy security and potential conflicts, as well as taking advantage of low oil prices. China is expected to continue stockpiling crude oil at least through 2026, supported by new laws and infrastructure development that allow for greater storage capacity, though some analysts suggest the pace might slow as storage limits are reached.
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Potential U.S. intervention in Venezuela has also added to the bearish sentiment after the Trump administration designated Cartel de los Soles, which it alleges is led by President Maduro, as a foreign terrorist organization. The US’ Operation Southern Spear has been targeting boats suspected of trafficking drugs in the region, with the hawks linking the moves to Venezuela’s 303 billion barrels of proven oil reserves, the largest of any country.
Venezuelan oil production has been on a sharp decline since 2017, with a slew of sanctions prohibiting its access to financial markets. However, production has been slowly rising, from 360 kb/d in 2020 to around 1 mb/d currently, supported by black-market sales. However, commodity analysts at Standard Chartered have pointed out that it will take years before the South American country can hit peak production of around 2.5 mb/d that it achieved in the 2011-2015 period thanks to years of underinvestment in maturing oil fields as well as a lack of exploration drilling. Shortages of equipment, supplies and labour have also taken a toll on Venezuela’s energy sector. Further, the country is likely to have a hard time attracting fresh capital after the ConocoPhilips (NYSE:COP) debacle. The Venezuelan government under the late Hugo Chávez, and continued under Nicolás Maduro, expropriated ConocoPhillips’ oil assets in 2007 during a wave of nationalizations of foreign oil investments. This led to ConocoPhillips receiving two major international arbitration awards totaling over $8 billion. Venezuela’s attempts to annul the awards have failed, and ConocoPhillips is now pursuing legal avenues to enforce the rulings and collect the compensation from Venezuela’s remaining overseas assets, such as those related to the Citgo refinery.
On the gas front, European natural gas prices have softened, with the front-month Dutch Title Transfer Facility (TTF) contract for December delivery settling below EUR 30 per megawatt hour
(MWh) at EUR 29.5/MWh, its lowest settlement in 18 months. European natural gas inventories drew by 3.76 billion cubic metres (bcm) to 91.97bcm on 23 November, according to Gas Infrastructure Europe. This marks the largest weekly fall in inventories since late February 2025. Recent cold weather has not supported prices, and there are now mild forecasts for the rest of December.
In contrast, U.S. gas prices have continued rallying, with gas futures hitting $4.6/MMBtu on falling inventories coupled with expectations of higher demand. Weather forecasts suggest temperatures will remain mostly below normal over the next two weeks, boosting demand. Further, U.S. LNG exports are rising, with flows averaging a record 18 bcfd in November, up from October’s 16.6 bcfd.
By Alex Kimani for Oilprice.com
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