International oil prices faced downward pressure last week due to significant developments in the Russia-Ukraine conflict, though negotiations have progressed slower than market expectations. Meanwhile, escalating tensions between the U.S. and Venezuela have strengthened geopolitical risks, providing renewed support for oil prices. Additionally, OPEC+ has agreed to maintain stable production levels next year, reinforcing supply-side risks as a bullish factor for crude.
However, the medium-to-long-term outlook for oil remains oversupplied, and a resolution to the Russia-Ukraine war could exacerbate the glut, capping price rebounds. In natural gas markets, U.S. futures have rallied on record exports, colder weather, and rising demand from data centers, trading above $4.9/MMBtu as of December 2.
**Crude Oil: Volatility Amid Mixed Signals** With a loose supply backdrop widely anticipated, market focus has shifted to geopolitical developments. While risks remain elevated, their impact on oil prices has moderated, leading to reduced risk premiums. As a result, crude prices are oscillating within a wide range, caught between weak fundamentals and geopolitical uncertainties.
The Russia-Ukraine conflict has entered a critical phase. Kremlin spokesperson Dmitry Peskov stated that President Putin’s talks with U.S. Middle East envoy Brett McGurk marked a step toward peace. Meanwhile, Ukraine continues targeting Russian energy infrastructure and tankers. Separately, U.S. military deployments in the Caribbean threaten Venezuela, further destabilizing global energy markets.
On the supply side, OPEC+ members agreed on December 1 to maintain 2026 production quotas and establish a mechanism to assess maximum production capacity. Eight members also reaffirmed their voluntary output adjustments, pausing planned Q1 2026 supply hikes due to seasonal factors. However, analysts warn that disputes over "maximum sustainable capacity" assessments could undermine the group’s cohesion.
In the near term, bullish and bearish factors are in balance. Disruptions to Russian oil flows and Venezuela tensions persist, while OPEC+’s pause on output hikes offers temporary confidence. Still, long-term oversupply concerns—particularly if Russian crude floods the market post-conflict—continue to weigh on prices.
**U.S. Natural Gas: Rally Fueled by Record Exports** U.S. natural gas prices have surged, supported by strong oil prices, record exports, and robust domestic demand. LSEG data shows U.S. LNG exports hit a new high of 10.9 million tons in November, up from October’s 10.1 million tons, driven by colder weather and higher output.
Cheniere Energy, the top U.S. LNG exporter, shipped 4.6 million tons from Texas facilities, up from 4.1 million tons in October. Second-ranked Venture Global LNG maintained exports at 3 million tons. Europe absorbed 70% of U.S. LNG shipments in November (7.5 million tons), up from 69% in October.
Domestic demand is also rising, with Gulf Coast temperatures dropping 8°F month-on-month in November. Additionally, AI-driven data centers are straining power grids, boosting gas consumption. Analysts project U.S. LNG exports to grow 75% by 2030, with AI-related demand further tightening supplies and lifting prices.
However, weak spot demand from Asia—especially China—poses structural risks. Moreover, a wave of new LNG capacity could outpace demand growth next year, potentially pressuring prices.
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