Oil
- Crude oil remains pressured, as US and EU sanctions have yet to materially slow Russian seaborne exports. The Trump-Xi meeting omitted the Russian oil issue, suggesting purchases from this source will likely continue.
- OPEC+ decided on a 137,000 bpd production limit increase in December but paused further hikes for Q1 2026. Despite a moderate initial price reaction, the market surplus could still be the largest since 2020, even with a Q1 production cap.
- OPEC production rose by 400,000 bpd in September to over 29 million bpd, a near three-year high.
- Geopolitical risks include the potential for US action against Venezuela, a key concern given its large oil reserves. Venezuela’s output is currently 1.1 million bpd, down from 2.6 million bpd a decade ago, due to sanctions and underinvestment.
- The IEA projects a surplus of 4 million bpd, while the EIA estimates 2-3 million bpd. Russian seaborne exports are a key variable, recently falling to 1.88 million bpd, a three-year low.
Oil inventories are markedly below last year’s levels and the five-year minimum. Weak US stocks, despite the global surplus, suggest high net exports, potentially narrowing the WTI/Brent spread. Source: Bloomberg Finance LP, XTB.
Seasonality indicates a local trough in the oil market in late November. Source: Bloomberg Finance LP, XTB.
Gold
- Gold is oscillating near $4,000 per ounce, less than 9% below its historical peak, maintaining a year-to-date gain exceeding 50%.
- Significant ETF gold reductions persist, although at a slower pace than in the preceding two weeks. Conversely, speculative long positions in China have ceased to decline.
- A negative factor is the end of tax relief for gold buyers in China; effective November 1, only investors registered on the Shanghai Gold Exchange or futures exchange can deduct VAT.
- This regulatory decision, aimed at market normalisation, may lead to a marked decrease in gold demand.
- The People’s Bank of China (PBoC) holds approximately 8% of its reserves in gold. Given the 20% global average, prospects for continued PBoC purchases in the coming years remain strong.
ETFs continue to sell gold, albeit at a slightly slower pace. Source: Bloomberg Finance LP, XTB.
Seasonality suggests the year-end period for gold can be volatile. Source: Bloomberg Finance LP, XTB.
Natural Gas
- Natural gas prices are rising to near four-month highs due to forecasts of a sharp temperature drop in the Eastern United States mid-month.
- US gas demand on Monday was 77.2 bcfd (+5.1% YoY), while production hit 110 bcfd (+6.6% YoY). LNG exports are also at record levels (16.8 bcfd).
- US gas inventories are marginally above last year’s levels and about 5% above the five-year average. European stocks are significantly below average, but storage filling is ongoing.
Gas consumption remains above the five-year average, marking the start of the heating season, while production is at historical peaks. Source: Bloomberg Finance LP, XTB.
Inventory increases have recently outpaced the five-year average, driven by production growth rather than weak consumption. Source: Bloomberg Finance LP, XTB.
Long-term and 10-year averages indicate near-term price increases. Conversely, the 5 and 10-year averages suggest a local peak towards the end of November. Source: Bloomberg Finance LP, XTB.
Cocoa
- Cocoa bean deliveries to Ivorian ports are 16% lower than last year (305k tonnes vs. 365k tonnes since October 1), mainly due to transportation issues. December deliveries, coinciding with the main harvest, will provide a clearer seasonal picture.
- Mondelez indicates cocoa pod count is 7% above the five-year average, pointing to a potentially good harvest. Global production increase is expected mainly from South America, as Ivory Coast and Ghana harvests are anticipated to be flat.
- Exchange inventories continue to fall, currently at just over 1.8 million bags, a seven-month low.
Net positions in London are still negative, but the lack of an increase in short positions over the past 2–3 weeks may be a potential contrarian signal. Source: Bloomberg Finance LP, XTB
Cocoa prices are rebounding seasonally, with gains potentially lasting until late February/early March. Source: Bloomberg Finance LP, XTB
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