(MENAFN- ING) Energy – Oil declines on rising supply glut fears

NYMEX WTI continues to edge lower in the early trading session today after falling by more than 4% to settle around $58.5/bbl yesterday. The decline was largely driven by OPEC's revised surplus expectations for the global oil market, along with a bearish inventory report from the API. Meanwhile, West Texas Intermediate's prompt time-spread flipped to contango for the first time since February, a fresh sign of rising oversupply from both outside and within the OPEC+ alliance.

In its monthly oil market report, OPEC left its global oil demand growth forecasts largely unchanged at 1.3m b/d and 1.4m b/d for this year and 2026 respectively. Supply projections from producers outside the wider OPEC+ alliance are expected to rise by 920k b/d this year and 630k b/d in 2026, largely driven by higher output from the US, Canada, Brazil and Argentina. However, OPEC modified its expectations for the global oil market balance and now expects a small supply surplus in 2026, following OPEC+ production increases and higher supply from other producers. This compares to its earlier projections of a more balanced market.

Meanwhile, the release also shows that OPEC increased supply by just 33k b/d month on month to 28.5m b/d in October. However, this was 450k b/d less than the initial increase plan set by production quotas. The monthly output addition by Saudi Arabia, Kuwait, Iraq and Nigeria was partially offset by supply losses from Iran and Libya. The International Energy Agency (IEA) will release its monthly oil market report later today.

API's numbers show that US crude oil inventories increased by 1.3m barrels over the last week, while crude stocks in Cushing fell slightly by 43k barrels. Changes in refined product inventories remained mixed, with gasoline inventories falling by 1.4m barrels, and distillate stocks rising by 944k barrels and 2.5m barrels, respectively. The more widely followed EIA weekly inventory report will be released later today.

The Energy Information Administration (EIA) released its latest Short Term Energy Outlook yesterday, raising its US crude oil production growth estimates for both this year and next. The EIA now expects US crude oil production to average around 13.59m b/d in 2025, compared to a previous estimate of around 13.53m b/d. For 2026, the EIA expects US oil supply to average around 13.58m b/d, compared to its previous forecast of 13.51m b/d. On the other hand, the EIA estimates US petroleum consumption to remain flat at around 20.5m b/d this year and in 2026.

Metals – Aluminium continues to rally on supply concerns

Aluminium continues to rally this week on the LME with prices trading above $2,900/t this morning. Aluminium has gained more than 13% this year. It is the third-strongest performer on the LME after copper and tin this year.

The metal is supported by tightening supply expectations in China and a broader risk-on tone following the easing of US-China tensions. The recent trade truce between the two economies has reduced a key downside risk to our outlook for industrial metals.

On the supply side, China's aluminium output is close to its self-imposed 45 million tonne capacity cap. China's aluminium capacity cap was introduced in 2017 to curb oversupply and reduce emissions. The global aluminium market looks largely balanced for next year, assuming the cap holds. This is also weighing on exports, keeping markets ex-China tight.

Outside of China, there have been few recent European or US restart announcements, largely due to difficulties in securing long-term power contracts at competitive prices. However, Indonesian exports are rising fast and may pressure prices next year.

Aluminium prices have also drawn support from the broader rally in copper, with copper recently hitting a record high. The copper-aluminium price ratio is nearing record levels, signalling further potential for substitution from copper to aluminium.

Agriculture – Coffee drops on possible tariff cuts

Arabica coffee prices extended losses, with prices falling more than 5% at one point yesterday, after President Donald Trump signalled plans to reduce tariffs on coffee. In a recent media interview, Trump said,“We are going to lower some tariffs,” when asked about the coffee prices. Meanwhile, US Treasury Secretary Scott Bessent backed Trump's stance, saying that substantial announcements on tariffs for crops not grown in the US, including coffee, will come in the next few days. This could bring more coffee into the country.

The latest data shows that total coffee stocks at the US port warehouses monitored by the ICE exchange have been declining since 31 October and fell by 1.2k bags to 405k bags as of 12 November, the lowest level since March 2024, driven by constrained bean flows from top producer Brazil due to tariffs. Investors are also watching the US Supreme Court as it reviews the legality of Trump's tariffs.

The USDA is scheduled to release its monthly WASDE report tomorrow. However, due to the US government shutdown, last month's report was not published, and this month's release may also face delays. The initial market expectations suggest that the agency could increase its US corn-ending stocks by 58m bushels to 2,168m bushels, while soybean ending stocks are expected to rise by 6m bushels to 306m bushels.

In global supply, the agency could revise up its Argentina corn and soybean output estimates to 53.3mt (+0.3mt) and 48.6mt (+0.1mt), respectively. On the other hand, Brazil's corn and soybean production estimates are expected to increase to 132.8mt (+1.8mt) and 175.7mt (+0.7mt) respectively. Global ending stocks for corn are expected to increase from 281.4mt estimated in September to 283.2mt, whilst for soybeans the ending stock estimates are expected to rise to 124.4mt from 124mt.

MENAFN13112025000222011065ID1110337501