Dollar Surges, Energy Prices Plummet on Geopolitical Whispers

Crude oil and gasoline futures experienced a significant downturn, with gasoline prices reaching a one-and-a-half-week low. This decline was largely influenced by a strengthening dollar, which climbed to a 1.5-week high, typically acting as a headwind for energy commodities. Added to market pressure were unconfirmed reports suggesting the Trump administration's secret engagement with Russia on a peace plan for Ukraine, which could reshape geopolitical energy dynamics.

Conflicting signals emerged from inventory data, as the EIA reported a larger-than-expected drop in crude supplies but a rise in gasoline and distillate stockpiles. However, significant support for oil prices stemmed from a sharp decrease in Russian crude exports, falling to 1.7 million barrels per day in early November, the lowest in over three years. This reduction is a direct consequence of Ukrainian drone attacks on Russian refineries, impacting as much as 20% of Russia's refining capacity.

The broader energy market faces underlying support from ongoing geopolitical risks, including recent maritime incidents in the Gulf of Oman and US military preparations concerning Venezuela. Concurrently, OPEC's latest revision projects a global oil surplus for Q3, diverging from previous deficit estimates, and raises US production forecasts for 2025. OPEC+ also signaled a pause in production hikes for early 2026 amidst these surplus concerns.