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The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn@pricegroup.com


Conspiracy Theory Debunked. The Energy Report 11/05/2026

Yes, some oil traders occasionally reach for their tinfoil hats. Frustrated oil bulls were convinced President Trump was somehow using large trades to suppress oil and gasoline prices. But if he could do that, why wait until after the midterms? Well for oil it looks like the market believes the Iran war will be over and the crack spread break looked like it believes the Russia Ukraine war will be over too. Good Luck with that. Politicians talked about plenty of election issues, but Americans ultimately voted on gasoline prices. Other concerns mattered, of course, but most Americans felt the impact of higher prices at the pump.

Yesterday’s selloff centered on the midterms and Iran, as the election outcome led traders to price in a quicker end to the war. Brent settled at $94.62, down $8.98, while WTI closed at $88.12, down $7.97—their lowest settlements since August 31 and oil’s biggest daily decline since April. Brent had reached $118 as recently as Friday. Oil fell more than 8 percent yesterday, leaving futures down over 14 percent this week . Selling extended into a fourth day this morning, though oil remains roughly 60 percent above its level at the start of the year. Democrats, the party of high gasoline prices, suddenly objected to those prices, blaming President Trump and his war in Iran. They also wrongly blamed tariffs, which have nothing to do with gasoline prices. Overall, tariffs have actually had a disinflationary effect in many sectors. But trying to explain the intricacies of macroeconomics to many voters doesn’t go over well especially when they’re getting**** with big shocking numbers at the gasoline pump. So, Democrats captured both chambers of Congress magnifying the pain of gasoline prices and voters forgot that these were the party that have done everything they can to raise gasoline prices by killing pipelines and restricting production.

Some say that the market now believes Trump has a bigger incentive to cut a deal with Iran. The White House itself said the war cost them the election. Vice President Vance posted Wednesday that “The reason we lost is the war,” adding that the president himself had said so the night before. On Fox News Tuesday night, Trump pointed to the gasoline price as the reason. For years we have known that the American people vote their pocketbook and in this case they voted their gas tank.

You have talk about a deal that’s in the air. Democratic senator Chuck Schumer said that he believes that he has some Republicans on board to help stop trump’s war but at the end of the day prior to the stoppage of the war the midterms talk of a deal was in the air. Washington and Tehran have both signaled openness to negotiations, and Trump told reporters Iran wants to make a deal. He also said there were no immediate plans for further strikes, though the U.S. remained prepared to act. Qatar and Pakistan are pushing mediation, though reports say the two sides remain far from an agreement.

Physical supply is loosening as well. Renewed Gulf exports pushed Middle Eastern oil availability above near-term demand for the first time since July. Oil price ignored a supportive EIA report. It Showed that U.S. crude inventories fell by 865,000 barrels, the fifth straight weekly decline. The longer-term picture is still tight. U.S. distillate fuel oil inventories slipped last week below 100 million barrels for the first time since 2022 and before that 2008. Stocks stood at roughly 99 million barrels on October 30 — 25 million barrels (about 20 percent, or 1.63 standard deviations) below the ten-year seasonal average.

That reversed the previous trend toward deficit reduction and underscored the shortage of diesel and heating oil. Natural gas always comes with a few degrees of separation, and this morning is a good reminder why. ox Weather and the models have been highlighting a strong Super El Niño that is expected to deliver a milder winter across much of the U.S. (especially the North and Midwest) and also temper heating needs in parts of Asia.

That warm-leaning outlook took a bit of a dip in some runs recently, LNG flows have stayed elevated, and the big-picture production picture remains healthy. The result is a market that is breathing a little easier on the heating-demand side.

Milder temperatures mean less burn for heat, which can free up some supply and take a little of the heat out of natural gas and heating oil as we head deeper into the season. Inventories are in a comfortable spot heading into winter, and the El Niño signal is one of the clearer ones we’ve seen in years. It’s not a free pass—cold snaps and model flips can still show up—but the setup is more forgiving than a classic tight winter would have been. For households and the broader market, that’s welcome relief.

That weather-related easing is limited, though. It does not fix the underlying product tightness. Jet fuel prices remain elevated, and airline executives are warning that high levels could stick around for an extended period. Strong demand, constrained refining capacity, and tight distillate balances continue to support jet and diesel values even if heating oil gets some weather help. El Niño may cool the heating-oil and natural-gas story this winter, but the jet-fuel tightness looks more structural. That keeps a floor under refined product prices and is worth watching as we move through the colder months. Geopolitics is still a live variable. The market has priced in some hope of a quicker end to the Iran tensions, but Iran-related risks have not disappeared, distillates remain critically tight, and the barrel balance has not suddenly turned loose.

A pause in talks or any fresh disruption could put a floor under prices in a hurry. The drop has been notable, but the underlying tightness has not gone away. Meanwhile, Yemen/Saudi fighting continues, with the Houthis still active around Bab al-Mandeb and Red Sea disruptions remaining a factor. The UAE is exploring additional oil pipelines to reduce dependence on the Strait of Hormuz—another sign that the region is hedging against future disruptions. Looking further out, Wood Mackenzie’s global oil refinery outlook to 2040 sees refined product demand peaking around 2032 before declining, with roughly one in five refineries at rising closure risk.

That longer-term picture reinforces why the complex refining side and product balances matter even as weather takes some pressure off the heating markets. El Niño is delivering a milder setup that should ease some of the upward pressure on natural gas and heating oil this winter—good news for balances and for consumers. The jet and distillate story remains tighter and more structural, and geopolitics can still inject volatility quickly Stay ahead of the markets with the latest weather-driven moves—download the Fox Weather app today so you’re never caught off guard by the headlines that move prices.

And don’t miss the expert analysis on the Fox Business Network. Want the edge the pros use? Sign up now for the wildly popular Phil Flynn Trade Levels and the Magic Metals Report. Call today—no obligation—at 888-264-5665 or email me directly at pflynn@pricegroup.com.



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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

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