Oil Faces Headwinds as Peace Talk Hopes and Weak US Data Weigh on Prices

Crude markets just took a hit. WTI January futures dropped 2.33% while RBOB gasoline fell 1.99%, both touching 5-week lows amid fresh catalysts.

What spooked traders:

1. Peace deal chatter - ABC News reported Ukraine accepted revised peace terms with Russia. If this sticks, sanctions on Russian oil exports could ease, flooding global supplies back online.

2. US economy stumbling - Retail sales came in at +0.2% m/m (vs +0.4% expected), ADP private payrolls contracted -13,500/week on average, and consumer confidence cratered to 88.7 (a 7-month low, well below 93.3 forecast).

The supply side twist:

Russia’s crude shipments collapsed to 1.7M bpd in early November—the lowest in 3+ years—thanks to Ukrainian drone strikes on refineries (knocking out 13-20% of refining capacity) and tightened US/EU sanctions. Yet OPEC just flipped from forecasting a -400k bpd deficit to a +500k bpd surplus in Q3, driven by surprise US production strength. The IEA is even darker, projecting a record 4M bpd global glut for 2026.

Inventory snapshot:

• US crude: 5% below seasonal average
• Gasoline: 3.7% below seasonal average
• Distillates: 6.9% below seasonal average

OPEC+ plans to pause production hikes in Q1 2026, but still has 1.2M bpd of cuts to unwind. Geopolitical tensions around Venezuela add a floor to prices, but the oversupply narrative is winning for now.