The Shipley Energy Commercial Solutions Team is excited to share the December Energy Market Update to inform you of trends, weather, and other factors impacting the energy market.
As December unfolds, the oil markets continue to grapple with countervailing forces driven by geopolitical headlines surrounding the Ukraine conflict and potential regime change in Venezuela. Refined product prices have retraced sharply from recent highs amid advancing peace talks, underscoring persistent bearish sentiment on crude benchmarks while highlighting opportunities in refining margins amid curtailed U.S. refinery operations. Below is an overview of key developments, including their prospective implications for supply dynamics, pricing, and seasonal patterns.
Price Technical Update
Refined products remain under pressure, with heating oil (HO) and reformulated gasoline (RBOB) retracing ~40 cents and 20 cents per gallon, respectively, from November 19 peaks that tested 2025 highs on stalled Ukraine-Russia peace efforts. As noted previously, RBOB seasonality often signals bottoms in December; a breach below the 2025 low of $1.79 would invalidate this pattern, exposing multi-year support in the $1.55-1.74 COVID recovery zone (per October 6 analysis). We favor buying opportunities along the forward curve into summer if front-month levels falter, consistent with bearish price outlooks (bullish margins amid U.S. refinery curtailments). National averages dipping below $3/gallon—with southern stations under $2—reinforce this downside bias.
WTI crude holds above its 2025 low of $55.12, where we anticipate building positive momentum absent further erosion, supported by OPEC+’s supply restraint and nascent economic recovery signals. U.S. Manufacturing PMI’s climb to 52.5 (>50 expansionary) and China’s opportunistic SPR buys of discounted barrels provide foundational demand underpinnings.
Downside exhaustion patterns are emerging in energy futures, mirroring historical late-November to mid-December weakness, with potential for rotational buying if key supports hold.
The 50-day moving average for WTI at ~$62/bbl acts as a pivotal threshold; a sustained push above could catalyze long positioning across the complex, including CL, RB, and HO contracts.
Broader flows into energy proxies like the Oil Services ETF (OIH) hint at rekindling sector interest, even as equities face correction risks, potentially aiding a crude rebound.
HO futures exhibit relative seasonal resilience versus crude, expanding heat cracks amid outages, while RBOB garners support from regional pricing anomalies and supply tightness.
Recent Headlines impacting volatility and price moves:
Ukraine’s Escalation Against Russian Shadow Fleet: Ukraine has intensified its campaign with strikes on two Russian crude-laden shadow fleet tankers, Kairos and Virat, in the Black Sea, alongside a reported explosion on a third vessel off Senegal. These actions, aimed at disrupting Russia’s oil export infrastructure, coincide with fragile ceasefire prospects and could prompt retaliatory measures from Moscow, including threats to allied shipping. Such disruptions may elevate shipping risks and insurance costs, indirectly supporting crack spreads if Russian export volumes face sustained constraints.
CPC Black Sea Loading Disruptions: A Ukrainian drone assault on the Novorossiysk terminal has prompted the Caspian Pipeline Consortium (CPC) to suspend operations at one of its three single-point moorings, slashing expected throughput from 1.6 million barrels per day (mb/d) to approximately 800,000 b/d. With repairs timeline uncertain following a second major incident in a month, this bottleneck risks amplifying Black Sea export delays and contributing to tighter regional supply balances, potentially with knock-on effects for European refined product imports.
OPEC+ Deferral of Production Increases: Following ministerial consultations, OPEC+ has postponed planned output hikes for Q1 2026, citing elevated geopolitical uncertainties, and has engaged a Dallas-based consultancy to recalibrate member capacities for 2027 baselines. This decision effectively withholds additional supply from global markets through March, which could foster a floor under Brent and WTI prices if demand signals remain resilient, while underscoring the cartel’s cautious stance amid external risks.
U.S. Posturing on Venezuelan Regime: President Trump issued a stark warning via Truth Social, declaring Venezuelan airspace off-limits to commercial flights and alluding to imminent U.S. military options, including carrier deployments, in response to escalating regime hostilities. Breaking reports suggest a decision on targeted strikes is forthcoming, which could unsettle Venezuela’s already constrained crude exports (currently ~800,000-1 million b/d, primarily to China) and heavy sour supplies critical to U.S. Gulf Coast refiners, thereby pressuring import costs and margins.
Ukraine’s Targeting of Russian Refining Assets: Ukrainian forces struck the 180,000 b/d Afipsky refinery, a vital node in Russia’s military fuel supply chain, with the full scope of damage yet to be assessed. This hit compounds pressures on Moscow’s downstream capacity and may yield an initial uplift to global refining cracks by curtailing Russian product exports, though retaliatory escalations could prolong market volatility.
U.S. Manufacturing PMI Momentum: The final November 2025 S&P Global U.S. Manufacturing PMI came in at 52.2, surpassing the flash reading of 51.9 but moderating from October’s 52.5, affirming ongoing expansion fueled by accelerated output and new orders. This resilience points to sustained diesel demand from industrial and freight activity heading into 2026, potentially amplified by lower rates and reshoring trends, offering a counterbalance to bearish energy sentiment.
Zelenskiy’s Outlook on Ukraine Resolution: President Zelenskiy expressed unprecedented optimism for war termination, signaling willingness for prompt engagements with President Trump and U.S. delegates post-Moscow discussions, while acknowledging formidable hurdles to a final accord. Yet, concurrent military intensifications, including Black Sea operations, appear poised to impede progress, sustaining risk premiums in oil futures and complicating supply outlooks.
Putin’s Stance on European Escalation: Amid heightened rhetoric, President Putin affirmed Russia’s readiness for conflict should Europe pursue aggression, against the backdrop of Ukraine’s maritime strikes and U.S.-Venezuela tensions. Compounding this, severe cold snaps across Russia could hinder operational logistics on both fronts, potentially delaying crude and product flows while elevating global risk aversion.
November brought below-normal temperatures and early snow to Ohio and Pennsylvania. Despite below average temperatures and early significant snowfall, electricity prices remained relatively stable. The 12-month electricity prices in Ohio grew 0.45% from $53.13/MWH to $53.37/MWH, while 36-month prices decreased by 0.32% from $53.43/MWH to $53.26/MWH. Pennsylvania’s 12-month prices increased at a slightly higher margin of 1.71% from $57.94/MWH to $58.93/MWH, and its 36-month prices grew by 0.38% from $58.65/MWH to $58.87/MWH.
We continue to see market fundamentals that are potentially worrisome for energy buyers:
Natural Gas storage injection levels, while 191 Bcf above the 5-year average, are 18 Bcf below last year at this time.
Demand growth forecasts continue to increase, primarily driven by data center construction.
PJM’s Capacity Auction for rates effective 6/1/2026 – 5/31/2027 came in at the FERC imposed cap in all zones with a price of $329.17/MW-Day.
The next capacity auction will take place in December. It’s likely that capacity rates for 6/1/2027 – 5/31/2028 will also hit the FERC cap price.
The wholesale energy markets watch these factors, and changes can push prices up or down on a daily basis. Based on where we stand now, we recommend evaluating these strategies:
We recommend locking in your energy price for the next 24 months as soon as practical. With the forward energy curve now in backwardation, longer terms are more attractively priced than shorter terms. While there’s always the potential for prices to move down, given the long-term issues PJM faces, we believe the upside price risk is higher.
Consider a capacity and or transmission passthrough structure. While we now have a capacity cap for unknown periods through 5/31/2028, different suppliers may use different estimates, making these offers more difficult to compare than a passthrough structure.
Invest in a plan to reduce your peak demand and overall energy consumption, if you haven’t already. Lowering your associated PLC and or NSPL tag could have substantial price benefits for the following year.
Your to-do list:
As you budget for 2026 and beyond, keep in mind it is unlikely for prices to materially decrease in the next few years.
Monitor the broader economic conditions as these can influence energy prices.
Want to help your business navigate the current market? Get started with your Shipley Energy Advisor today!
U.S. storage achieved 3.9Tcf prior to the withdrawal season starting. The week ending November 28th saw storage numbers at 3,923 Bcf which is a net decrease of 12Bcf from the previous weeks storage data.
Plaquemines LNG in Louisiana received FERC approval to introduce gas into Block 17, bringing the terminal’s final 2.6 Bcf/d block online ahead of the January 2026 timeline. As a result, the U.S. raised its 4Q25 LNG export forecast by 3%. Golden Pass Trains 1–2 and Corpus Christi Stage 3 Blocks 4–7 are expected to start shipments in 2026, adding 2.1 Bcf/d of capacity by year-end.
Per the maps below, the Euro Seasonal forecast demonstrates last month’s prediction of where temps were estimated to be across the US on the left. The map on the right demonstrates a more recent expectation, and the change is drastic. We are anticipating a colder December than initially thought.
We anticipate the price of residential natural gas to average around $13.80 per Tcf would be a 2% increase from last year. Assuming this is accurate, it would keep natural gas prices stable for users that heat their homes with natural gas.
Wind is a renewable resource that is used to generate electricity that competes with natural gas and coal for share in the powerstack, especially across the Central US. Wind generation capacity is increasing, and it is battling with temperature as a driver of powerburn demand. This means wind generation has a significant impact on natural gas storage injections and withdrawals. On average, we are displacing 6.5 Bcf/day of natural gas demand due to wind generation.
Factors impacting the natural gas markets currently:
We are now in withdrawal season and our biggest drivers for price volatility are weather and production rates
Recent volatility has been attributed to weather forecasts which impact demand, and storage injections.
Action Advice
We recommend checking in frequently with your account manager.
Other rate options include Basis Only or NYMEX Lock deals to separate the two elements of your natural gas supply price to look for potential value vs standard Fixed pricing. For those who want to float their NYMEX, consider a cap and floor structure to economically manage your risk. Ask your Account Manager for details.
December 2025 Natural Gas NYMEX Settlement Price: $4.424/MMBtu Last month: November 2025 Natural Gas NYMEX Settlement Price: $3.376/MMBtu Last year: December 2024 Natural Gas NYMEX Settlement Price: $3.431/MMBtu
Disclaimer: The market update is intended solely for informational purposes only. Shipley Energy Company does not warrant or attest to its accuracy. All actions and judgments taken in response to this report are the recipient’s sole responsibility. Shipley Energy Company shall not be liable for any direct, indirect, incidental, consequential, special, or exemplary damages or lost profit resulting from these market updates.
test
Share this post
Related Posts
Natural Gas Safety Tips
Why Propane Flame Weeding Is the Best Choice for Small Farms
Installing An Oil Tank? Consider This
Top 12 Energy-Saving Tips for Spring
Chapter 5: How To Keep Your Propane Tank Grounded in a Flood-Prone Zone
