November marked a period of stabilisation in crude and some product markets after several months of heightened volatility. While geopolitical uncertainties remained present, the month was characterised by a modest recovery in crude prices, and subtle but important shifts in forward structures. However, local middle distillate product markets were much more volatile pushed by uncertainty over product availability and both prices and margins were on a rollercoaster, easing at the end of the month. For the ARA hub and global tank terminal operators, November provided a bit clearer signal of where markets may be heading into early 2026, with oversupply risks gradually becoming more visible.
1. Crude Prices Recover Slightly but Remain Under Pressure
Brent crude traded around $63–65/bbl through the month, ending at $63.34. This represented a mild recovery from earlier lows but still placed November on track for a small monthly loss.
Market sentiment was driven by:
- Hopes surrounding renewed peace negotiations in Ukraine
- Expectations that the Fed may cut interest rates in December
- OPEC+ signaling it will pause production increases into Q1 2026 due to concerns about oversupply
Despite these developments, the Brent forward curve remained in backwardation, though spreads narrowed slightly compared to October, a sign that the balance between supply and demand is slowly shifting.
Strategic takeaway: Crude market behavior indicates a more balanced, but still fragile, fundamental landscape. Terminals should prepare for potential changes in cargo origins and destination patterns if oversupply grows in 2026.
2. Forward Curves Show Some Softening, Fuel Oil Moves Closer to Contango
Forward curve data shows notable changes versus previous months:
- Middle distillate forward curves saw steep declines at the front end as supply concerns eased after negotiations on peace in Ukraine, but not before rising on tighter supplies.
- RBOB gasoline displayed seasonal contango, typical for winter periods.
- LSFO swaps moved into a small contango, though still shallow.
These curve shapes confirm that storage arbitrage opportunities remain out of reach, especially for diesel and jet fuel.
Strategic takeaway: Although forward markets remain backwinded, the small contango emerging in fuel oil could be an early signal of structural shifts in 2026. Terminals should monitor this closely for early re-emerging storage demand.
3. Storage Economics: Still Negative, Though Marginally Less Severe
All break-even (BE) storage rates in November remained negative, confirming that storage is still uneconomical. Key BE rates included:
- Gasoil M1–M3: –€7.36/cbm
- Kerosene M1–M3: –€7.69/cbm
- EBOB gasoline M1–M3: –€6.00/cbm
- LSFO M1–M3: –€1.28/cbm (least negative)
Negative BE values mean that future prices do not cover the cost of storing product, even at theoretical zero storage cost.
Importantly, the trend shows a slight easing in negative values, especially for fuel oil and longer-dated gasoline structures suggesting that the most severe backwardation may have passed.
Strategic takeaway: September and October represented the deepest backwardation of the year. November’s data signals a slow return toward more normalised market conditions, though still far from profitable contango.
4. Product Cracks: Broad Weakness Across the Barrel
Product crack spreads in the ARA region moved sharply lower through after a peak in November:
- Gasoil cracks: –19.5% week-on-week
- Diesel cracks: –24.3%
- Jet-kero cracks: –14.3%
- Gasoline cracks: down modestly on higher product availability
- Naphtha: the exception, rising 27% due to petrochemical restocking
Refinery margins weakened but remained workable:
- Brent cracking margins NWE: ~$13/bbl
- Hydroskimming margins slipped back into negative territory
These moves reflect a market shifting away from the extreme tightness seen in early autumn, as supply from the US, Middle East and Europe normalised after maintenance cycles.
Strategic takeaway: Lower cracks and stable inventories suggest calmer market conditions for terminals, with more predictable throughput and fewer abrupt flow shifts.
5. Global Oil Stocks: Mild Builds in Several Hubs
Page 11 data shows that global stock trends remained broadly stable, with slight builds in some regions:
- USGC: Light ends and middle distillates remain within historical ranges; middle distillates trend positive
- ARA:
- Light ends: stable around 1.8–1.9 Mcbm, slight downward trend
- Middle distillates: averaging 3.6 Mcbm, mild negative trend
- Heavy products: slight build
- Singapore: Middle distillates declined modestly, heavy stocks grew
- Fujairah: Stocks increased across the board, driven by resumed refinery output and moderate bunker demand
Strategic takeaway: The soft but steady stock builds, especially in Fujairah and the USGC, show that supply availability is no longer the primary concern. This reinforces why product cracks fell sharply in November.
Conclusion
November marked a clear transition in global oil markets as the extreme tightness seen in early autumn eased and fundamentals began to stabilise. Softer middle distillate cracks, a flattening of forward curves, and slightly improving break-even storage rates all point toward a market gradually moving away from stress and closer to balance. While storage economics remain firmly negative, the trend is less severe than in prior months, and subtle shifts such as the emerging contango in fuel oil suggest that the foundations for potential storage opportunities in 2026 are slowly forming. For tank terminals, the operational focus therefore remains on managing steady throughput rather than contango-driven storage, but November’s developments indicate that the market cycle may be approaching a turning point. Terminals that maintain flexibility and close customer alignment will be best positioned as oversupply risks build and trading strategies evolve in the new year.
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