Oil Slides to 5-Week Lows as Peace Hopes Grow

WTI crude dropped 1.51% while RBOB gasoline fell 1.29% on Tuesday—both hitting 5-week lows. The culprit? Market expectations of a Russia-Ukraine peace deal, which could flood global markets with previously sanctioned Russian crude.

What’s weighing on prices:

Ukraine signaled openness to revised peace terms (Russia’s response still pending), triggering a selloff. Simultaneously, weak US economic data dealt a double blow—September retail sales came in at +0.2% m/m vs. expected +0.4%, while ADP payrolls averaged -13,500/week over four weeks. Consumer confidence also cratered: the Conference Board’s index dropped to 88.7 (7-month low), missing expectations of 93.3.

The supply wildcard:

Russia’s crude shipments have cratered to 1.7M bpd (first half of November)—the lowest in 3+ years. Ukraine’s drone campaign destroyed 13-20% of Russia’s refining capacity by October-end, cutting output by ~1.1M bpd. But if peace takes hold, these restrictions lift, and oil faces more downward pressure.

Supporting factors:

Tanker storage surged 9.7% w/w to 114.31M barrels (2.25-year high), signaling inventory buildup. Plus, geopolitical risks linger—US military posturing toward Venezuela (world’s 12th-largest producer) and ongoing sanctions keep crude from collapsing.

Market outlook:

OPEC just flipped its Q3 forecast: now predicting a 500K bpd surplus vs. last month’s -400K deficit forecast. The IEA expects a record 4.0M bpd global surplus by 2026. OPEC+ will add 137K bpd in December, then pause hikes through Q1 2026. Consensus expects Wednesday’s EIA report to show crude inventories down -2.36M bbl and gasoline up +1.16M bbl.

Bottom line: Peace talks + weak demand + looming supply surge = recipe for continued downside on crude.