Oil and Gas, Mint Finance

Suhas Reddy

Oil and Gas

Deep Fundamental Analysis

Mint Finance

Mint Finance's investment research blends deep fundamental analysis with technical & quant insights. Investment strategies straddle across multiple asset classes with risk management embedded into every trade to deliver an outsized reward-to-risk ratio.

Mint Finance's research is centered around three key themes. First, energy transition and climate change. Second, artificial intelligence. Third, shifting world order with its impact across politics and monetary economics.

Commodities

Natural gas is a naturally occurring hydrocarbon gas mixture consisting primarily of methane, but commonly including varying amounts of other higher alkanes, and sometimes a small percentage of carbon dioxide, nitrogen, hydrogen sulfide, or helium. It is formed when layers of decomposing plant and animal matter are exposed to intense heat and pressure supplied by existing under the surface of the Earth over millions of years. The energy that the plants originally obtained from the sun is stored in the form of chemical bonds in the gas.

<ul>
<li>Henry Hub surged on cold forecasts and record LNG demand, while TTF stayed soft due to tepid demand. Weather and LNG flows now drive a volatile winter spread.</li>
<li>The Henry Hub–TTF spread faces exceptional uncertainty, shaped by diverging regional fundamentals. Henry Hub remains sensitive to U.S. forecast shifts, while TTF is anchored by strong EU storage.</li>
<li>With weather driving short-term volatility, the spread remains highly unpredictable. Even steady U.S.–Europe LNG flows offer only partial stability as shifting forecasts and regional imbalances continue to reshape price dynamics.</li>
</ul>


Henry Hub surged on cold forecasts and record LNG demand, while TTF stayed soft due to tepid demand. Weather and LNG flows now drive a volatile winter spread.
The Henry Hub–TTF spread faces exceptional uncertainty, shaped by diverging regional fundamentals. Henry Hub remains sensitive to U.S. forecast shifts, while TTF is anchored by strong EU storage.
With weather driving short-term volatility, the spread remains highly unpredictable. Even steady U.S.–Europe LNG flows offer only partial stability as shifting forecasts and regional imbalances continue to reshape price dynamics.


Gas Markets See Divergence Due to Weather, LNG Flows and Europe’s Calm Start

Heating oil, also known as No. 2 fuel oil, accounts for about 25% of the yield of a barrel of crude, the second largest "cut" after gasoline. The heating oil futures contract trades in units of 42,000 gallons (1,000 barrels) and is based on delivery in New York harbor, the principal cash market trading center. Options on futures, calendar spread options contracts, crack spread options contracts, and average price options contracts give market participants even greater flexibility in managing price risk.
The heating oil futures contract is also used to hedge diesel fuel and jet fuel, both of which trade in the cash market at an often stable premium to NYMEX Division New York harbor heating oil futures.

<ul>
<li>Refining margins surged as diesel shortages deepened, driven by outages, sanctions, and shrinking Western capacity. Diesel-led product strength lifted refining margins even as crude stayed weak.</li>
<li>The U.S. crack spread hit its 2025 high in November. Despite a brief correction, Europe’s structural tightness will keep the demand for diesel high.</li>
<li>Europe’s sanctions, limited capacity, and winter demand will boost U.S. exports, keeping gasoline and distillate inventories tight despite temporary price corrections.</li>
</ul>


Refining margins surged as diesel shortages deepened, driven by outages, sanctions, and shrinking Western capacity. Diesel-led product strength lifted refining margins even as crude stayed weak.
The U.S. crack spread hit its 2025 high in November. Despite a brief correction, Europe’s structural tightness will keep the demand for diesel high.
Europe’s sanctions, limited capacity, and winter demand will boost U.S. exports, keeping gasoline and distillate inventories tight despite temporary price corrections.


Diesel Tightness Isn’t Done Yet: Refining Margins Look Set to Stay Elevated

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Crude oil can be refined to produce usable products such as gasoline, diesel and various forms of petrochemicals. It is a nonrenewable resource, also known as a fossil fuel, which means that it can't be replaced naturally at the rate we consume it and is therefore a limited resource.

<ul>
<li>Global oil outlooks diverged in November as the EIA cut demand forecasts, and the IEA lifted projections. However, both agencies expect supply to grow faster than demand.</li>
<li>The EIA, IEA, and OPEC flag a rising risk of oversupply heading into 2026, noting that expanding production and already-elevated inventories could keep the market looser.</li>
<li>Strong U.S. LNG exports prompted the EIA to raise its Henry Hub forecasts, signalling price strength will rely more on robust export demand than on domestic consumption this winter.</li>
</ul>


Global oil outlooks diverged in November as the EIA cut demand forecasts, and the IEA lifted projections. However, both agencies expect supply to grow faster than demand.
The EIA, IEA, and OPEC flag a rising risk of oversupply heading into 2026, noting that expanding production and already-elevated inventories could keep the market looser.
Strong U.S. LNG exports prompted the EIA to raise its Henry Hub forecasts, signalling price strength will rely more on robust export demand than on domestic consumption this winter.


EIA, OPEC, IEA Sound Caution: Rising Supply and Inventories Threaten 2026 Price Stability

<ul>
<li>Surging U.S. LNG exports, stronger power demand, and shifting weather models have tightened fundamentals, driving Henry Hub futures to near three-year highs despite record output and above-average storage levels.</li>
<li>Henry Hub’s rally since mid-October has been driven by record LNG exports and colder winter forecasts, which outweighed rising U.S. production and above-average storage levels.</li>
<li>Options positioning shows short-term caution but growing medium-term optimism, with higher call interest across later contracts signaling expectations for firmer Henry Hub prices into early-2026.</li>
</ul>


Surging U.S. LNG exports, stronger power demand, and shifting weather models have tightened fundamentals, driving Henry Hub futures to near three-year highs despite record output and above-average storage levels.
Henry Hub’s rally since mid-October has been driven by record LNG exports and colder winter forecasts, which outweighed rising U.S. production and above-average storage levels.
Options positioning shows short-term caution but growing medium-term optimism, with higher call interest across later contracts signaling expectations for firmer Henry Hub prices into early-2026.


Unpacking the Henry Hub Rally and the Forces Driving It

Gasoline is the largest single volume refined product sold in the United States and accounts for almost half of national oil consumption. It is a highly diverse market, with hundreds of wholesale distributors and thousands of retail outlets, making it subject to intense competition and price volatility.The NYMEX Division New York harbor unleaded gasoline futures contract and reformulated gasoline blendstock for oxygen blending (RBOB) futures contract trade in units of 42,000 gallons (1,000 barrels). They are based on delivery at petroleum products terminals in the harbor, the major East Coast trading center for imports and domestic shipments from refineries in the New York harbor area or from the Gulf Coast refining centers.The unleaded gasoline contract specifications conform to those for oxygenated gasoline, required in many areas for controlling emissions that can adversely affect air quality. With the ongoing phaseout of the oxygenate methyl tertiary butyl ether (MTBE) the industry is shifting towards ethanol. RBOB conforms to industry standards for reformulated regular gasoline blendstock for blending with 10% denatured fuel ethanol (92% purity) as listed by the Colonial Pipeline for fungible F grade for sales in New York and New Jersey. RBOB is a wholesale non-oxygentated blendstock traded in the New York Harbor barge market that is ready for the addition of 10% ethanol at the truck rack.

<ul>
<li>Major Western oil giants posted strong Q3 2025 profits as surging refining margins and trading gains offset volatility and sustained production strength.</li>
<li>Ukrainian strikes and escalating Western sanctions on Russia tightened global product supply, pushing refining margins higher and supporting downstream earnings.</li>
<li>Refining margins are likely to stay elevated as prolonged sanctions, supply disruptions, and seasonal maintenance sustain tightness despite potential demand headwinds.</li>
</ul>


Major Western oil giants posted strong Q3 2025 profits as surging refining margins and trading gains offset volatility and sustained production strength.
Ukrainian strikes and escalating Western sanctions on Russia tightened global product supply, pushing refining margins higher and supporting downstream earnings.
Refining margins are likely to stay elevated as prolonged sanctions, supply disruptions, and seasonal maintenance sustain tightness despite potential demand headwinds.


Big Oil Gained in Q3 as Sanctions and Strikes on Russia Drove Refining Margins Higher

Energy Transition | AI | Shifting World Order