Weekly Insights - 12th October 2025

Oil

Oil prices fell sharply this week. On Friday (10th October), Brent Crude slipped 3.8% to $62.17/bbl, with WTI dropping into the $50s, finishing up the week at $58.52, the lowest levels since early May 2025. The sell-off was triggered by renewed U.S.-China trade tensions, and a ceasefire in the Israel-Palestine conflict which has removed major risk premium.

As noted in last week's analysis, OPEC+ continue to unwind production cuts, though November's output was raised by 137kbpd, smaller than markets feared. Despite this, U.S. crude stocks remain high, with API reporting a +2.78mmb build for the week to October 3rd. U.S. production is hitting record highs, with commercial crude inventories held at refineries and tank farms on the Gulf Coast swelling by 15mmb by late June, the fastest seasonal increase for 35 years.

The forward curve (pictured below) is flattening. In fact, only the front three contracts of the Brent curve remain backwardated, and increasingly less so. In other words, futures prices are nearly equal to spot, reflecting ample supply and rising inventories, an early shift toward contango.

ICE Brent Crude Futures Forward Curve (Source: TradingView)

In geopolitics, Houthi attacks on Red Sea shipping remains a threat, but the Gaza ceasefire and lack of new Iran tensions has alleviated previous upside drivers. A U.S. government shutdown also clouds the demand outlook, potentially weakening oil use.

Gas & Power

European gas and power markets remain tight entering winter. EU storage is low by historical standards. As of October 10th, gas inventories were 82.9% full (down from 94.8% last year), the lowest level since 2021.

Chart showing EU gas storage levels as of 10th October 2025, in comparison to the 5Y average (Source: GIE)

Russia's declining pipeline exports (with a full ban on LNG in 2027 and on pipeline gas in 2028) means the EU will rely even more heavily on LNG. Analysts see U.S. suppliers providing roughly 70% of EU's LNG by 2026-2029, up from 58% today. As a result, any disruption (e.g. U.S. export delays, Chinese demand spikes or tariffs) could jolt EU prices. In fact, U.S. tariffs on EU goods (15% enacted in late July) have added uncertainty to transatlantic energy trade.

Benchmark Dutch TTF gas prices have fallen from winter highs, around €33/MWh ($10.8/MMBtu), easing slightly this week as milder temperatures and strong LNG inflows offset storage concerns. JKM LNG (Asia) traded near $11.1/MMBtu, its lowest since May 2024, with Asian buyers staying on the side-lines amid full inventories. Henry Hub (U.S.) climbed to $3.32/MMBtu, supported by record LNG exports and high domestic power-sector demand.

According to the EIA's October outlook, U.S. natural gas production hit a record 107 Bcf/d, while consumption reached 91.6 Bcf/d, both of which are all-time highs. The surge in U.S. output is helping balance global LNG supply, but spot cargoes remain tight as maintenance at U.S. Gulf terminals coincides with early winter buying in Europe.

European power prices remain volatile. Strong solar output has kept day-ahead averages near €75/MWh, but evening peaks continue to spike above €300/MWh when wind generation drops.

Metals

Precious metals continued their surge this week, while industrial metals remained strong on tight fundamentals. Gold blasted through $4,000/oz for the first time on Wednesday (54% YTD gain) and trades at $4,017/oz at the time of writing. Gold's rally is underpinned by U.S. inflation uncertainty and Fed cuts ahead, as well as geopolitical uncertainty. Silver and platinum also hit multi-year highs.

By contrast, copper (a bellwether for industry demand) has reached $11,000/ton (a 16-month high) on the back of mine disruptions and continued EV/renewables demand. Aluminium and nickel are under pressure, as new smelters and projects ramp up. LME inventories of copper and aluminium remain near historic lows, reflecting the view that green transition demand will outpace near-term supply. China's move to curb rare earth exports sent prices spiking, though this only affects a few specialty metals, not LME-traded copper or aluminium.

Aside from trade, mining politics loom large. Indonesia is boosting nickel exports, and the DRC is under pressure on cobalt quotas. New U.S. tariffs on Chinese steel/aluminium (and vice versa) are also keeping markets nervous.

Ags

U.S. crop markets were subdued amid abundant supply and policy uncertainty. Early harvest reports confirm large corn and soybean crops, keeping downward pressure on prices. Chicago December corn trades in the mid-$4s, and November soybeans around $10, reflecting record U.S. yields and modest export demand.

Unfortunately, as a result of the U.S. federal government shutdown, vital data to global grain and soybean trading has gone dark, leaving traders and farmers without crop production estimates, sales data and market reports, during the peak of the autumn harvest. The data blackout comes at a tough time for farmers fighting with low grain prices and uncertainty over damage to corn and soy fields from dry weather. The industry relies on USDA reports to price and hedge commodities.

Trump is also locked in a trade war with China, the world's biggest soy importer, resulting in no purchases of U.S. supplies. Expectations are that a $10-15 billion aid package will soon be coming the way of farmers hurt by trade disputes and surpluses.

Macro

Global markets have been shaken by trade war news. On Friday, Trump promised new tariffs on China and threatened to cancel his summit with Xi. The dollar fell on the threat, lifting commodity-linked currencies like the AUD and CAD. China also retaliated with new levies on U.S. port fees, keeping tensions high.

Traders now price in a 97% chance of a 25-bps Fed cut at its October meeting, and 92% for another cut in December. This comes after soft U.S. jobs data and a cooling inflation outlook.

By contrast, in the UK and Australia, inflation remains above-target. In Europe, political drama in France and weak German data pushed the euro lower. In Japan, the yen had its sharpest weekly drop since September 2024 due to Japanese politics and a dovish BoJ outlook.

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