Key Takeaways
- • Brent crude fell 7.6% to settle at $104.77 a barrel and WTI dropped 7.4% to $96.46 on Monday, their steepest one-day percentage declines since July 27, according to the Energy Report.
- • Physical premiums collapsed: the Oman-over-Dubai premium fell to near zero from more than $30 a barrel in mid-September, and the Dated Brent premium dropped to about minus $1 from roughly plus $19 in early October, the weakest in about 3½ months.
- • U.S. gasoline futures fell more than 20 cents a gallon and diesel futures lost nearly 19 cents, while the national average regular gasoline price fell 12 cents over the week to $4.17 a gallon and diesel eased to $6.29.
- • Hedge funds built the largest-ever short-only exposure across seven Henry Hub natural gas contracts (625,150 contracts in late-October CFTC data), while U.S. storage stood about 38 Bcf above the five-year average.
- • European gas storage entered November at just 74.6% full, the lowest for the time of year since records began in 2011, with TTF trading at €94–97/MWh.
Summary
Oil, gasoline and diesel prices posted their steepest declines since late July on Monday, driven by diplomatic signals and a growing physical supply response. Brent settled at $104.77 a barrel, down 7.6%, and WTI at $96.46, down 7.4%. Gasoline futures fell more than 20 cents a gallon, diesel futures lost nearly 19 cents, and European gas futures slid almost 11%. At the pump, the U.S. national average for regular gasoline fell 12 cents over the week to $4.17 a gallon, while diesel eased to $6.29.
The Energy Report argues that futures understate the supply picture. Citing Bloomberg's Javier Blas, the piece notes that physical crude markets show a clearer signal of rising supply. The Middle East physical premium for Oman crude over Dubai has fallen to near zero from more than $30 a barrel in mid-September, and the North Sea premium in the Dated Brent market dropped to about minus $1 a barrel from roughly plus $19 in early October. Both are at their weakest in about 3½ months, indicating that loaded, shipped oil is becoming cheaper relative to benchmarks. Oil flowing through the Strait of Hormuz is keeping the market well supplied.
Geopolitical developments contributed to the decline. The U.S. carried out limited strikes on Iran's Qeshm Island on Monday, officials said, as part of quieter defensive actions. President Trump played down the prospect of a return to full war after the midterms, telling reporters, "We had a war with Iran. We won," and answering "No" when asked whether he would strike after the elections. Iran's foreign ministry said the ball is in the U.S. court. Iranian President Masoud Pezeshkian said the government had been granted certain powers by Supreme Leader Mojtaba Khamenei for talks with the U.S., per the state-run Islamic Republic News Agency. Diplomatic sources told Al-Jadeed that Qatari mediation had overcome procedural obstacles in U.S.-Iranian negotiations. A China-Oman joint statement called for the Strait of Hormuz to return to normal and safely reopen to navigation. Separately, envoy Steve Witkoff said the U.S. is mediating new Russia-Ukraine peace talks in Abu Dhabi next week, which the piece says reduces diesel and product risk premium. Refined products remain tight, however, and concerns over an attack on a Kazakhstan pipeline pushed diesel and gasoline crack spreads higher after a sharp pullback.
In natural gas, the piece highlights a record bearish positioning by hedge funds, with the largest-ever short-only exposure across seven Henry Hub contracts and net shorts among the most bearish since early 2020. The EIA reported working gas at 3,724 Bcf as of late October, about 38 Bcf above the five-year average, with end-October levels projected near 3,850 Bcf, roughly 2% above average. EIA sees dry gas production around 112 Bcf/d this year. Henry Hub futures are near $2.90/MMBtu. The article notes that NOAA's winter outlook, reported by Fox Weather, points to a strong El Niño favoring warmer-than-average northern U.S. temperatures, though some models flag possible polar vortex weakening in late November or early December that could bring Arctic air and a short-covering squeeze. In Europe, storage at 74.6% full and TTF at €94–97/MWh stand in contrast, a gap the author says makes U.S. manufacturing more attractive.
The piece is an opinion column by Phil Flynn, Senior Market Analyst for the Energy Report and a Fox Business Network contributor, and includes promotional subscription and trading-service solicitations.
The Energy Report argues that futures understate the supply picture. Citing Bloomberg's Javier Blas, the piece notes that physical crude markets show a clearer signal of rising supply. The Middle East physical premium for Oman crude over Dubai has fallen to near zero from more than $30 a barrel in mid-September, and the North Sea premium in the Dated Brent market dropped to about minus $1 a barrel from roughly plus $19 in early October. Both are at their weakest in about 3½ months, indicating that loaded, shipped oil is becoming cheaper relative to benchmarks. Oil flowing through the Strait of Hormuz is keeping the market well supplied.
Geopolitical developments contributed to the decline. The U.S. carried out limited strikes on Iran's Qeshm Island on Monday, officials said, as part of quieter defensive actions. President Trump played down the prospect of a return to full war after the midterms, telling reporters, "We had a war with Iran. We won," and answering "No" when asked whether he would strike after the elections. Iran's foreign ministry said the ball is in the U.S. court. Iranian President Masoud Pezeshkian said the government had been granted certain powers by Supreme Leader Mojtaba Khamenei for talks with the U.S., per the state-run Islamic Republic News Agency. Diplomatic sources told Al-Jadeed that Qatari mediation had overcome procedural obstacles in U.S.-Iranian negotiations. A China-Oman joint statement called for the Strait of Hormuz to return to normal and safely reopen to navigation. Separately, envoy Steve Witkoff said the U.S. is mediating new Russia-Ukraine peace talks in Abu Dhabi next week, which the piece says reduces diesel and product risk premium. Refined products remain tight, however, and concerns over an attack on a Kazakhstan pipeline pushed diesel and gasoline crack spreads higher after a sharp pullback.
In natural gas, the piece highlights a record bearish positioning by hedge funds, with the largest-ever short-only exposure across seven Henry Hub contracts and net shorts among the most bearish since early 2020. The EIA reported working gas at 3,724 Bcf as of late October, about 38 Bcf above the five-year average, with end-October levels projected near 3,850 Bcf, roughly 2% above average. EIA sees dry gas production around 112 Bcf/d this year. Henry Hub futures are near $2.90/MMBtu. The article notes that NOAA's winter outlook, reported by Fox Weather, points to a strong El Niño favoring warmer-than-average northern U.S. temperatures, though some models flag possible polar vortex weakening in late November or early December that could bring Arctic air and a short-covering squeeze. In Europe, storage at 74.6% full and TTF at €94–97/MWh stand in contrast, a gap the author says makes U.S. manufacturing more attractive.
The piece is an opinion column by Phil Flynn, Senior Market Analyst for the Energy Report and a Fox Business Network contributor, and includes promotional subscription and trading-service solicitations.
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