Week in Review – Energy Markets Bewitched by Bearish Trends

Fuel markets wrapped up October with mostly tricks and no treats, as crude prices slipped for a third consecutive month. Rising global supply, weak Chinese economic data, and a strengthening U.S. dollar cast a shadow over investor sentiment. Despite faint optimism surrounding a tentative U.S.-China trade truce, the market remains haunted by oversupply fears and sluggish demand growth, keeping energy prices subdued just in time for Halloween.

Brent crude futures are up this morning to $65 per barrel, while West Texas Intermediate (WTI) is up near $61, but still marking a decline of roughly 3% for the month and 2.46% for the week. The U.S. dollar's strength, which is hovering at three-month highs, has made oil more expensive for foreign buyers, further dampening global appetite.

OPEC+ producers are expected to announce another 137,000 bpd output increase for December, extending their string of monthly hikes. The group has collectively added more than 2.7 Mbpd this year, about 2.5% of global supply, as members compete for market share in an already crowded field. Saudi crude exports have climbed to a six-month high, while U.S. production reached a record 13.6 Mbpd, according to the EIA. With production ghoulishly high and demand growth ghosting expectations, the market is anxiously anticipating future demand patterns.

Adding to the spook factor, China's manufacturing activity shrank for a seventh straight month in October, which is the longest contraction streak since 2019, thus signaling waning industrial demand. Although Presidents Donald Trump and Xi Jinping announced a temporary easing of trade tensions, including tariff cuts and renewed agricultural purchases, there is caution about what other tricks could be up their sleeves.

Meanwhile, Western sanctions on Russia's energy sector continue to rattle refined product markets. The U.S. recently sanctioned Rosneft and Lukoil, tightening restrictions on two of Russia's largest producers and pushing diesel refining margins to a chilling $29 per barrel, the highest since early 2024. The European Union's forthcoming 2026 ban on fuels derived from Russian crude is further reshaping trade flows, with Indian refiners scrambling to secure alternative supplies from Saudi Arabia, Kuwait, and Iraq.

Prices in Review

Crude prices opened the week at $61.82 and experienced mild fluctuations over the following days as market sentiment remained cautious ahead of the OPEC+ meeting. Prices slipped slightly to $61.50 on Tuesday before declining more sharply midweek, reaching a low of $60.18 on Wednesday amid continued concerns about oversupply and weak Chinese demand. Prices climbed on Thursday, with crude hitting $60.39, before edging down again to $60.30 on Friday morning. Overall, crude prices fell $1.52 per barrel, representing a 2.46% decrease for the week.

Diesel prices opened at $2.4115 on Monday and showed modest volatility throughout the week. Prices inched higher to $2.4400 on Tuesday before dipping midweek to a low of $2.3874 on Wednesday. The market then increased slightly, rising to $2.4204 on Thursday and $2.4248 on Friday morning. Overall, diesel prices increased by $0.0133 per gallon, marking a 0.55% gain for the week.

Gasoline prices opened at $1.9209 on Monday and trended steadily upward throughout the week. After modest gains early in the week, prices rose to $1.9305 on Tuesday and $1.9367 on Wednesday before climbing more sharply to $1.9751 on Thursday. By Friday morning, gasoline opened at $1.9842, marking the weekly high. Overall, gasoline prices increased by $0.0633 per gallon, representing a 3.29% rise for the week.