Market Insights - 23rd November 2025

Oil

Oil prices this week fell to four-year lows, with Brent settling around $62.3/bbl and WTI $57.8/bbl. Both benchmarks extended a multi-week slide, with front-month futures now flirting with contango as ample near-term supply weighs on the curve. Fears of a supply glut dominate market sentiment, with global output surging in 2025, up roughly 6.2mmb/d since January.

U.S. crude inventories unexpectedly drew down by 3.4 million barrels last week (vs an expected draw of 0.6 million barrels). Refiners ramped up runs to meet strong export demand, but this bullish signal was offset by builds in gasoline and distillates, the first rise in over a month, a sign of slowing fuel consumption. U.S. oil output remains around record high levels (c. 14mmb/d). With prices sub-$60, shale is coming under pressure. Permian rig count is down 17% YoY, and major producers have begun idling rigs and cutting jobs.

From a geopolitical standpoint, risk premium ebbed this week. Reports of a U.S. peace proposal for the Russia-Ukraine war triggered selling, as a potential end to the 3-year conflict could normalise Black Sea oil flows. In fact, Washington's draft framework was not immediately rejected by Kyiv, stoking optimism for a deal. This comes just as new U.S. sanctions on Russian oil giants Rosneft and Lukoil take effect, which aim to squeeze Moscow's revenues. Traders speculate that if peace talks advance, sanctions could be eased, further boosting supply. For now, Russia has managed to keep barrels flowing via stockpiles and alternate buyers. In the Middle East, the Israel-Gaza conflict continued, but with no major escalation affecting oil output.

With global demand growth slowing and supply rising, market structure has loosened. Brent's prompt backwardation has narrowed sharply, and nearby contracts are are times cheaper than deferred, a tentative contango reflecting today's surplus. Supporting prices is the approach of winter and still healthy refining margins, but the consensus is that the fundamental tide has turned bearish. Even OPEC's own outlook now concedes the risk of a "super glut" in 2026 if production isn't reduced.

Gas & Power

U.S. Henry Hub gas priced climbed for a fifth straight week, ending near $4.58/MMBtu (Dec futures). That marks a 52% rally over the past 5 weeks, with winter weather being the spark. Forecasts turned colder late November and early December, driving up anticipated heating demand. Helping meet this surge, U.S. gas production hit a new high, averaging 109.4 bcfd in November, up from 107.4 in October. Ample supply has led to bloated storage, with domestic inventories now 5% above the 5-year average for this time.

Robust output is also feeding export terminals at near-record rates. LNG feed gas demand is 18 bcfd in November, an all-time high as the Freeport LNG plant returned to full service. Notably, a commissioning cargo from Qatar is enroute to the new Golden Pass LNG facility in Texas, heralding even more export capacity soon. U.S. gas market structure reflects a healthier balance than oil, though with cold weather ahead and LNG exports maxed out, near-term gas prices have momentum to the upside.

European gas prices remain subdued entering winter, with Dutch TTF gas sitting around €34/MWh (equal to around $10/MMBtu), a 15-month low. Exceptionally full storage (EU sites 95-100% filled in early November) and mild autumn weather have kept European gas in a comfortable surplus. EU storage hit its targeted 90% by autumn and easily surpassed it, avoiding last summer's frantic scramble for LNG. Ample inventories and steady LNG inflows (aided by weaker Asian demand over summer) mean Europe faces the winter with a strong buffer. In contrast, Asian LNG prices have firmed, with the JKM marker near $12/MMBtu, a 3-month high. Some Asian buyers have returned to the market, possibly prompted by a minor US-China tariff truce or anticipcation of peak winter needs. Notably, Japan made news in the power space: a regional governor approved restarting the world's largest nuclear plant (Kashiwazaki-Kariwa) after a long post-Fukushima shutdown. This partial restart (endorsed by the Japanese government) is aimed at cutting expensive LNG imports and bolstering energy security. Once online, those reactors will reduce Japan's gas-fired power demand, potentially softening Asian LNG import needs in late 2026.

In Power, European electricity prices are relatively soft as gas prices stay low and renewables output improves seasonally. After a summer of weak winds, wind generation ramped up with autumn storms. Britain hit an all-time wind output record (22.7 GW) in early November, covering around 44% of UK demand. Across the continent, wind is now entering its high season, offsetting the decline in solar production. The result is stable to falling wholesale power prices in many markets, barring localised volatility.

One notable shift is in gasoil (diesel) usage for power. With oil prices so low, some Asian utilities relying on diesel for peaking have seen a cost breather, though oil-fired generation still remains minimal on the whole. In the U.S., power generation is in a shoulder season lull. Mild weather through late November has kept heating demand for power modest, allowing natural gas storage to build and tempering electricity prices.

Metals

Base metal prices pulled back slightly this week, consolidating after strong gains in recent months. Early in the week, optimism over a U.S.-China trade truce gave base metals a boost, however by mid-week, Fed policy uncertainty and weak Chinese data capped the rally.

Copper's fundamentals remain tight. Traders noting critically low exchange inventories, with LME copper stocks not far above historical lows. On the supply-side, mine disruptions and project delays has analysts forecasting a refined copper deficit in 2026, which has enticed funds into long positions.

Other base metals mirrored copper's tepid performance. Aluminium eased toward a four-week low around $2,570/ton, pressured by softening European demand and steady Chinese output. Nickel and zinc were likewise weaker this week, each down 1-2%. Steel-making metals had mixed news. Iron ore held firm above $120/ton on sustained Chinese construction activity, but steel prices in China wobbled on signs of oversupply and high inventories.

Gold paused its dramatic autumn rally, with spot gold ending around flat on the week at $4,085/oz. Earlier in the week gold had fallen over 1%, but it rebounded on Friday after dovish signals from the Fed. U.S. October payrolls surprised to the upside, but unemployment hit a 4-year high. Gold also faced headwinds, with global equities rallying on risk appetite (S&P500 made gains this week), potentially diverting some safe-haven flows. Also, other Fed officials struck hawkish tones (keeping rates on hold for longer), which could limit gold's upside.

Ags

Major grain prices ended the week little changed after a rollercoaster ride. Early in the week, grains rallied sharply, with news of a trade thaw with China sparking a surge. Traders grew optimistic that China would ramp up U.S. crop purchases after a tentative tariff truce. Indeed, China bought U.S. soybeans and wheat in unusually large volumes mid-week. Prices jumped 2-3% on these developments. However, by late week, the rally fizzled as ample global supplies and profit taking took hold. Analysts noted that bullish news was mostly priced in, and bears regained control.

The grain complex continues to wrestle with supply factors. In corn, Brazil remains a dominant force, with the country's November corn exports projected at 6.36 MMT, up from last year and flooding the market. U.S. corn exports on the other hand are sluggish, partly due to fierce Brazilian competition. U.S. corn harvest is essentially complete, and yields were good. Latest USA estimates put the 2025 U.S. corn crop at around 15 billion bushels (a near-record), reinforcing comfortable domestic supply.

For soybeans, attention is on South American weather. Traders are monitoring a potential El Nino, which often brings excess rain to Argentina and drier conditions to northern Brazil. So far, no major issues, with Brazil on track for another record soybean crop (forecast 157 MMT), and Argentina's prospects are improved from last year's drought disaster. U.S. soybean U.S. soybean supply is ample but not problematic. 2025 harvest was strong, but domestic crush demand (for oil and meal) is also at records thanks to biofuel sector growth. This tug of war kept soybeans range-bound around the low-$11s.

Wheat markets remain the most bearish, weighed by abundant global stocks. Russia continues to export wheat at breakneck pace, undercutting U.S. and EU wheat in many tenders. U.S. wheat exports to date total 14.8MMT, +23% vs last year (though last year's export programme was historically weak), so the U.S. is still struggling internationally. In bullish news, India's wheat harvest was officially tallied at a record 117.5MMT, which could allow India to lift its wheat export ban next year. In Black Sea developments, Ukraine's grain exports continue via alternative routes (Danube River and rail) amid the war. The tentative Russia-Ukraine peace discussions, if they progress, raise hope that the Black Sea grain corridor could fully reopen in 2026. Any ceasefire or deal would unleash Ukrainian grain onto markets without restraint, keeping wheat rallies in check.

Bio

The biofuels sector saw several policy developments this week. In the U.S., the EPA is finalising the next phase of Renewable Fuel Standard (RFS) quotas, and rumours around the draft volumes moved markets. Mid-week, RIN credit prices dropped sharply on speculation that EPA might set 2026 blending mandates lower than expected or provide more waivers. Conventional ethanol RINs (D6) had been trading around $0.90 each, but fell by nearly $0.10 on Wednesday amid the uncertainty.

However, by week end, sentiment shifted as biofuel advocates countered the rumours. 49 lawmakers urged the EPA to fully reallocate waived biofuel gallons that small refiners were exempt from. This push, if heeded, would increase actual blending requirements, tightening the RFS compliance market.

Physical ethanol and biodiesel markets were relatively stable. Ethanol production hit 1.06mmb/d in the latest EIA report, a seasonal high as gasoline demand holds up and producers take advantage of cheap corn. Ethanol stocks fell 800,000 barrels last week, signalling strong blending uptake. On the biodiesel side, soybean oil (the primary feedstock) saw choppy trading alongside broader vegoil markets. Soyoil futures were down on the week, reflecting large U.S. soy crush volumes and a recent pullback in global vegoil prices. Renewable diesel capacity continues to expand in the U.S., with new plants and refinery conversions in Louisiana, Texas and California, steadily increasing domestic demand for feedstocks like soyoil and rendered fats.

The European Union made waves in sustainable fuel policy by effectively banning crop-based biofuels in aviation. Under the EU's new ReFuelEU Aviation rules passed this year, biofuels made from food or feed crops do not count toward airlines' renewable fuel targets. This means traditional ethanol or biodiesel cannot be used to meet jet fuel mandates, only waste-based on synthetic fuels qualify. U.S. ethanol and SAF industry groups criticised this as a "de facto ban" on their products in the EU market. While this doesn't directly affect road fuel, it underscores EU's policy direction of phasing down crop-based biofuels in favour of advanced biofuels. Within the EU road transport sector, the cap on first-generation biofuels remains at 7% of transport energy. The European Parliament recently debated lowering that cap to 3.8% by 2030, but ultimately declined to tighten it in a vote.

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