Tianfeng Securities Co.,Ltd. released a research report stating that the crude oil market is currently in a contango structure, with the Brent far-month contract price at $68 per barrel as of November 20, 2025. Based on an assessment of supply-demand dynamics for 2026, the firm believes near-term prices may still face pressure. However, far-month prices could find support due to expectations of improved OPEC strategies and dwindling spare capacity, keeping Brent's long-term equilibrium price relatively firm. Key insights from Tianfeng Securities are as follows:
**Crude Oil Supply-Demand Balance Issues** In 2025, mainstream institutions projected significantly larger crude oil surpluses than actual inventory builds. This divergence emerged after OPEC announced accelerated production increases mid-year, leading to heightened surplus forecasts and notable disagreements among analysts. However, November marked a turning point in OPEC's strategy—the group declared a pause in production hikes for Q1 2026, signaling its continued influence on oil prices. Additionally, China's persistent "energy security" objectives and expanding reserves suggest sustained crude stockpiling.
**2026 Supply-Demand Scenario Analysis** Tianfeng Securities outlined two scenarios for 2026: 1. If OPEC resumes production increases in Q2 2026, global supply could rise by 1.93 million barrels per day (bpd), widening the surplus by 930,000 bpd compared to 2025. 2. If OPEC maintains its pause throughout 2026, global supply growth may reach 1.65 million bpd, with the surplus expanding by 650,000 bpd versus 2025.
**U.S. Shale Oil Break-even Costs Average $55/Barrel** Q3 2025 earnings reports showed most shale companies lowering capital expenditure guidance for 2025 while raising full-year production targets. Based on pre-tax profit data from 39 shale firms tracked by RBN, the break-even cost for exploration and production (E&P) companies is estimated at around $55 per barrel of oil equivalent (boe).
**Weak Spot Basis, Refining Margins Hit Yearly Highs** The Dubai-Brent spot basis weakened, and Saudi Arabia cut December official selling prices (OSPs) for light/medium crude to Asia by $1.2–$1.4 per barrel, likely reflecting soft demand concerns. Meanwhile, Brent time spreads strengthened since November, with the 1-2, 1-6, and 1-12 month spreads widening by $0.41, $1.55, and $2.50 per barrel, respectively, as of November 20. This may indicate supply instability from heightened Western sanctions on Russian oil. Refining crack spreads also reached yearly highs.
**Risk Factors** 1) Policy uncertainty under a potential Trump administration; 2) Macroeconomic volatility; 3) Geopolitical tensions; 4) OPEC production policy shifts; 5) Potential deviations in subjective estimates within this analysis.
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