Oil Futures Drop on Russia-Ukraine Deal, Oversupply Fears


   
Barani Krishnan
DTN Refined Fuels Market Reporter

   SECAUCUS, NJ (DTN) -- Crude futures settled down almost 2% Tuesday (11/25) 
as traders see that U.S. efforts to end the Russia-Ukraine could increase the 
chances of Russian oil trade sanctions being lifted, adding more barrels to 
global markets.

   Traders fear that millions of crude barrels belonging to Russia's Rosneft 
and Lukoil, now stranded at sea, will be looking for buyers once prohibitions 
against them are lifted. With OPEC already estimating an oversupply of 500,000 
bpd for Q3 2025, the surplus is expected to increase.

   Despite the bearish supply situation, the downside in crude futures was 
limited by growing expectations for a Federal Reserve rate cut In December, 
following a 7-month low in  U.S. consumer confidence reported by the Conference 
Board.

   The NYMEX WTI contract for January delivery settled down $0.89, or 1.5%, at 
$57.95 bbl after hitting a five-week low of $57.11.

   ICE Brent for January delivery dropped $0.97 to $62.40 bbl after falling 
earlier to $60.97, its lowest since the week ended October 17.

   December RBOB gasoline futures closed down $0.0394 at $1.8572, while 
front-month ULSD futures lost $0.0585 to finish at $2.3476 gallon.

   The U.S. Dollar Index softened by 0.407 points to 99.665 against a basket of 
foreign currencies, alleviating some of the pressure on commodity prices.

   Media reports on Tuesday suggested Ukraine had agreed in principle to a 
28-point peace plan drawn up by U.S. diplomats, although details on these will 
have to be agreed by Ukrainian President Volodymyr Zelenskyy with his U.S. 
counterpart Donald Trump.

   Experts believe that Russia needs the war to end too, given the impact of 
Ukraine drone attacks on its refineries.

   "Russia's refining industry just got hit with its lowest run rates in a 
dozen years -- a direct hit from Ukraine's intensified strikes," Phil Flynn, 
analyst at Chicago's Price Futures Group, said, estimating a 5--7% loss to 
Russian GDP with a 40% drop in refining.

   "This targeted campaign is delivering more punch than sanctions alone and 
pushing Putin ever closer to the negotiating table," Flynn said.




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