Oil is sliding toward surplus, but diesel and gas have not followed

Crude slides as the risk premium unwinds

Oil prices have fallen as the geopolitical risk premium built up around Middle East tensions unwinds. Brent has fallen below $92 a barrel and WTI is trading around $86 a barrel, according to ING, which attributes the move to expectations of U.S.-Iran de-escalation. Crude exports from the Persian Gulf have recovered to 80 to 85% of pre-war levels, though refined product shipments have recovered to only 35 to 40%. China's crude oil imports rose 13% month on month in October to 42 million tonnes. m:…2021

The forward view points the same way. ABN AMRO says the oil market is moving from severe supply shortages towards a better balance between supply and demand, and expects the market to be in oversupply in 2027, with oil prices declining. Middle Eastern exporters are restoring flows through alternative routes and shipping methods, bringing exports back close to pre-conflict levels, and new liquefied natural gas capacity, particularly in the United States, should ease prices in 2027. The bank does not expect full market normalisation until 2028, when it expects substantially lower prices. m:…3610

Diesel has not followed oil down

Diesel has not followed oil down. Northwest Europe diesel cracks are near $88 a barrel as of November 6, according to Vortexa. Global seaborne middle distillate exports excluding Russia reached 10.2 million barrels a day as of the same date, with Saudi Arabia's exports up by more than 500 thousand barrels a day month on month and India's up 130 thousand. Russian diesel and gasoil exports, which had fallen to 150 thousand barrels a day in August, surpassed 350 thousand as of November 6. m:…8341

Supply is coming, but slowly. The Negishi refinery, with capacity of 150 thousand barrels a day, is expected to return to operation in November, and the Fawley refinery, at 270 thousand barrels a day, is expected back in early December. China's fourth batch of export quotas could add 600 thousand barrels a day of transport fuel exports across November and December, and South Korea raised its diesel export cap to 110% of the volume exported in the same month a year earlier. Vortexa's caution is that a lasting softening of margins is possible only as long as Russia's diesel loadings do not collapse back to summer levels. m:…8341

Gas is the tightest part of the picture

Gas is the tightest part of the picture. Henry Hub natural gas prices rose more than 8% to above $3.2 per million British thermal units, and U.S. natural gas inventories reached 3.801 trillion cubic feet, 2.8% below year-ago levels, according to ING. European TTF gas prices are trading around 81 euros per megawatt-hour. ABN AMRO says Europe faces tight gas supplies this winter and a challenging task rebuilding stocks in the summer of 2027, and that Qatari supply disruptions and the ban on Russian gas increase reliance on U.S. LNG and Norwegian pipeline flows. m:…2021 m:…3610

Gold is caught in the same rates crosswind. Spot prices are hovering around $4,100 an ounce, and ING says expectations for tighter U.S. monetary policy remain the key near-term headwind for gold, even as China's central bank has extended its gold buying streak to 12 consecutive months. The broader commodity picture confirms the softening: the South African Reserve Bank's commodity price index fell 0.5% in October 2026, its first monthly decrease since July 2026. m:…2021 m:…5320

The turn in energy is real but it is not uniform. Crude is sliding because supply is returning and the risk premium is unwinding; diesel is holding because inventories are tight and refinery capacity is still coming back; gas is tight because winter is here and storage is below last year. Anyone planning around 2027 prices has to hold all three facts at once: ABN AMRO's oversupply call, Vortexa's diesel caution, and a European gas winter that has not eased yet. m:…3610 m:…8341 m:…2021