Oil on track for steepest yearly loss since 2020

On the last day of the year, oil is set to post the steepest annual lost since the start of the pandemic in 2020

• This year, oil traded under a persistent cloud of uncertainty, with the threat of a projected oversupply hanging over the market like a sword of Damocles
• There were pockets of price spikes due to geopolitics that briefly offset oversupply concerns and “Tariff Day” damage – It was nice to see AEGIS producer clients really hit hedging volumes hard on those ephemeral spikes in price
• On top of all of it, OPEC+ roiled the markets by reversing its longstanding policy of defending prices and increased output, looking to reclaim market share (BBG)
• Next year is forecasted to be difficult for oil prices due to the amount of oversupply predicted
• For the economy in general,  lower oil prices have helped reduce inflationary pressures as the US Federal Reserve cut rates three times in 2025
• Today’s weakness could be tomorrow’s strength – 2027 and 2028 is setting up to possibly see materially higher oil prices

Wishing everyone a happy New Year! And if you’re fishing offshore near Galveston this weekend, keep an eye out—you might spot a seized Venezuelan VLCC loaded with crude oil, anchored in the Galveston Offshore Lightering Area.

• Natural gas falls sharply on warmer forecasts
  • The February contract is trading lower, after falling below $4/MMbtu yesterday
  • Lower-48 weather forecasts warmed overnight, with temperatures expected to be well above the ten-year average at the start of January
  • The EIA will release the natural gas storage report for the week ending December 26 today, with a relatively small withdrawal of about -51 Bcf expected, according to the Bloomberg survey
• FERC approves MVP Southgate project (NGI)
  • Following regulatory approval, Mountain Valley Pipeline will be moving forward with the planned Southgate expansion project
  • The expansion will add 175 MMcf/d of capacity into the mid-Atlantic region
  • Recent modifications to the project increased the planned capacity, but shortened the length of the pipeline
  • The project should enter service in mid-2028