Oil Prices Are Heading for Another Monthly Drop

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00:00Will, it's nice to have you back talking oil. So what's the extent of the impact of this CME outage?

00:06Very nice to be with you, Francine. Yes, it's quite a significant part of the financial markets that are affected here.

00:12Trade in WTI, the main U.S. oil benchmark, of course, is not working, but also trade in lots of other futures markets,

00:21including S&P futures, Treasury futures, gold futures, U.S. copper futures.

00:25So it really is affecting a lot of derivative markets, a lot of commodities markets.

00:30And this would be a day where we wouldn't have much liquidity being the day between Thanksgiving and the weekend.

00:34But nonetheless, the longer it goes on, the more tricky it will be for traders who are looking to take positions in these markets.

00:42Of course, investors watching very closely what happens in Ukraine. How much does that impact actually the oil market?

00:50It's a really interesting question, Francine.

00:52In some senses, we've noted over the past few years that the sanctions on Russia, the actions that the West has taken against Russia,

01:00have not actually impeded the flow of oil into the global market.

01:04That has tended to remain strong through use of the shadow fleet and tactics like that.

01:09However, I think there's no doubt in terms of sentiment, a peace deal, especially a peace deal that came with significant sanctions relief,

01:16which was part of the U.S. proposal initially would be bearish for markets at the margin.

01:21It probably would mean more Russian oil could get into the market and would just remove some of the friction from global oil markets.

01:28So I think they would put a bearish interpretation on that.

01:31And that would come to a market which is already well supplied and looks increasingly well supplied going into 2026.

01:38Will, what are we expecting from OPEC Plus?

01:41Well, because of the outlook, the relative imbalance we see in the market, the bearish balances,

01:48OPEC, after increasing production to get back market share through much of 2025,

01:53signaled at its last meeting a month ago that it would pause production increases next year and hold things steady.

01:58And we don't think there's any reason to think that that would change.

02:01Talking to traders and analysts who follow OPEC, their expectation is very much that that policy will remain in hold

02:07and that OPEC will have to hold production.

02:09I think the question increasingly will be, as we go through next year,

02:13is there a point that OPEC feels that it has to cut production again because the market looks so oversupplied?