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Weekly Market Summary — Oct 30, 2026

Crude Oil

Crude Rallies as Post-Election Strike Risk Rebuilds Geopolitical Premium

Crude prices moved higher this week as the prospect of renewed US military action against Iran increasingly outweighed efforts to revive diplomacy. Diplomatic activity continued ahead of the midterm elections, including a proposal from Vice President JD Vance to resume negotiations, but US officials also warned regional allies to prepare for possible strikes and Iranian retaliation. The competing signals drove volatility throughout the week before prompt WTI closed above $104/Bbl on Friday as traders rebuilt geopolitical and supply risk premium.

Middle Eastern exports have remained relatively resilient despite the escalation, but the recovery continues to depend heavily on alternative routes. Kpler estimates non-Iranian Gulf exports recently averaged 24.6 MMBbl/d, above the 23.3 MMBbl/d prewar average, while flows directly through Hormuz remain well below normal. Alternative pipelines and ship-to-ship transfers have allowed producers to maintain exports despite reduced traffic through the Strait of Hormuz, but that more complicated system remains vulnerable if attacks intensify.

UKMTO reported three additional incidents around Hormuz on Thursday, including the first reported successful use of limpet mines against a tanker since the conflict began. Confirmed attacks on vessels have continued to rise through October, increasing the risk that further escalation could disrupt the alternative shipping system that has helped sustain Middle Eastern exports.

The risk premium has also remained embedded farther out the curve. By week’s end, Cal 27 WTI traded above $88/Bbl while Cal 28 was around $76/Bbl, highlighting how geopolitical and supply risks continue to support prices beyond the prompt market.

AEGIS maintains a bullish view on Bal 26 WTI. Diplomatic progress remains the clearest downside risk, but the market has limited spare buffers if Middle Eastern production or exports deteriorate again. The EIA still expects global inventories to decline by roughly 0.7 MMBbl/d in 4Q26 while Middle Eastern production shut-ins average about 4.5 MMBbl/d. With attacks accelerating and renewed US military action still under consideration, we continue to see near-term risks tilted to the upside.

We remain neutral on Cal 27. The underlying 2027 supply-and-demand balance remains considerably more bearish if Middle Eastern production and trade normalize. The EIA projects global inventories to build by roughly 4.9 MMBbl/d next year as regional production recovers and alternative export capacity expands. However, that surplus remains highly dependent on the timing and extent of the Middle East recovery, leaving enough uncertainty to keep us neutral relative to the current curve.

Natural Gas

Natural gas extends sell off, with winter prices falling to new lows

The December Henry Hub contract settled at $2.88/MMBtu this week, down another 17c. This brings losses over the past two weeks to 50c. The remainder of the Winter ‘26/’27 strip fell to $2.92/MMBtu, with selling mostly concentrated in this upcoming winters contracts. Summer ’27 fell 8c to $2.71/MMBtu, and Winter ‘27/’28 lost 9c to settle at $3.75/MMBtu.

The recent selling across the Henry Hub curve came as weather forecasts for November show continued above average temperatures. This should result in a reversal of some of the recent tightening seen in Lower-48 storage balances. Our estimate for gas inventories at the start of this winter has increased in the last two weeks to 3.9 Tcf, compared to about 3.85 Tcf a few weeks prior. This week was also the first in ten weeks where the EIA reported an expansion of the storage surplus. The inventory surplus had shrunk from nearly 200 Bcf above the five-year average to only slightly above average. However, this week’s report showed a small increase in the surplus. With mild weather forecast for the next few weeks, this surplus should continue to expand.

Continued high oil prices may also be weighing on gas prices, as expectations of associated gas production rise. The Permian Basin should be relatively unconstrained heading into winter, allowing for more associated gas to flow toward the gulf coast. Growth may end up being higher than many people have anticipated, if oil producers react to the higher WTI prices with more drilling.

As gas prices have trended lower, speculators have built one of the largest net-short positions in over ten years. This represents a bullish risk for gas prices, as any bullish catalyst would likely see substantial short covering. In the next several weeks, if there is any early cold weather that surprises the market, this outcome of short covering may materialize, but only temporarily. The downside risks of strong production growth, relatively slow LNG demand growth from Golden Pass Trains 2 and 3, and the forecasted record El Nino remain. The question now moves to how much of these factors the market has already priced in with the recent sell off. In our view much of these are now at least partially priced in and while fundamentals may remain loose into the first half of 2027, there does appear to be more surprise bullish risks now for near-term prices.

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AEGIS market analysts publish research across crude, natural gas, NGLs, refined products, metals, and rates.

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