Weekly Insights - 24/09/2025

Oil

Today, crude prices were at a three-week high after the American Petroleum Institute (API) reported a 3.82 million barrel reduction in U.S. crude inventories for the week ending 19th September. This was the largest draw in seven weeks, and brought WTI and Brent crude prices to $63.62 and $67.82 per barrel respectively at the time of writing.

The draw on inventories can be attributed to several factors, such as increased refinery demand to meet gasoline and distillate demand, as well as seasonal factors as the transition into the fall/autumn season begins to see increased heating fuel demand.

Prices are also being supported due to ongoing geopolitical risk. In recent days, Ukraine reported attacks on Russian oil pumping stations in the Volgograd region, with a state of emergency being declared in Novorossiysk, Russia's major Black Sea seaport containing major oil and grain export terminals. The market has also found short-term bullishness following Chevron's curbed oil exports from Venezuela, and a stalled deal to resume exports from Iraq's Kurdistan.

Overall however, the oil market is bracing for increased supply and slowing demand. In the IEA's latest monthly report, the agency stated that global oil supply would rise more rapidly this year, and a surplus would expand into 2026 as OPEC+ continue to increase output and non-OPEC+ supply also grows.

Gas & Power

European gas markets are in comfortable shape heading into winter. Summer 2025 saw strong LNG imports into Europe as a result of weak Asian LNG demand, freeing up cargoes for Europe. As a result, EU storage has climbed quickly. As of the time of writing, EU-wide gas storage was 81.6% full, on track to hit winter preparedness targets (90%) and providing a meaningful cushion against cold snaps / supply disruptions.

Context: EU gas storage operators aim to fill 90% of working gas capacity before the heating season (October-March). The go-to benchmark for Europe is for storage levels to be 90% full by 1st November. However, the EU recently agreed to loosen this deadline, with member states able to meet that target between 1st October-1st December, with a deviation of up to 10 percentage points allowed during difficult markets.

In the U.S., record exports continue. In August 2025, the U.S. posted its highest monthly LNG exports ever, with Europe receiving 66% of those volumes (6.16mt) as they look to diversify from Russian gas. Exports to Asia dipped slightly in August, reinforcing the pattern where European demand crowds out Asian flows. U.S. gas demand for LNG exports is now a major growth driver and is contributing to upward pressure on domestic prices.

Longer-term, analysts see global oversupply of LNG, with capacity set to far outstrip demand by 2030, which should keep gas prices subdued. However, demand drivers remain, with ExxonMobil expecting robust LNG growth (particularly in Chinese transport and industry).

Power markets reflect these trends: abundant gas and renewables keep wholesale power prices relatively low in Europe, though grid constraints and extreme weather could still lead to volatility.

U.S. power demand remains very strong. The EIA now forecasts record U.S. electricity consumption of 4,187 TWh in 2025, driven by heatwaves, data centres/AI, EV charging, and industrial loads. Several regional grids reported record summer peaks this year.

Renewables are expanding rapidly but not always reliably meeting peak load. In H1 2025, U.S. wind and solar output jumped 32% YoY, lifting clean power's share of generation to 45%. Solar in particular set midday records in September, but gas still accounted for 42% of generation in peak evening periods, keeping natural gas a critical marginal fuel.

In Europe, strong solar generation pushed down wholesale prices in early September, with many markets averaging below €75/MWh. However, when wind output dipped, prices spiked, with Germany seeing hourly prices above €400/MWh during evening peaks. The IEA notes average EU wholesale prices in H1 2025 were around $90/MWh, which is 30% higher YoY, largely due to gas, carbon costs, and weaker hydro/wind output.

Structural issues also remain. In the UK, wholesale power prices are set by the marginal generator (the most expensive plant needed to meet demand, usually gas plants). As a result, even during periods of high wind and solar, power prices often reflect gas costs. High retail tariffs and levies on top have left UK manufacturers paying 4x U.S. electricity costs per kWh and 2x German/French rates.

Metals

Precious metals are exploding. Gold hit a new record high ($3,764/oz at time of writing), driven by central bank buying and geopolitical uncertainty. Silver is similarly surging (above $40/oz) as funds pour in.

In contrast, base metals have been muted. Copper remains steady near $9,500-$10,000/ton (LME) after previous volatility from tariff scares, though funds remain cautious after big swings and have shifted money into gold and silver.

Analysts note that rising U.S. tariffs and "critical minerals" policy could hurt metals like refined copper and even silver (which was just added to a new U.S. list of strategic minerals).

Context: The U.S. has a "critical minerals" list, and policy aims to secure a reliable supply of these minerals deemed vital for defence, clean energy and tech. As of now, there are 54 minerals on the list (e.g. copper, silver, lithium, silicone) based on factors such as supply risk and economic importance. The policy encourages domestic production and stockpiling to reduce reliance on foreign sources. This may lead to the U.S. limiting/regulating imports to secure its domestic supply chains, hurting metals markets internationally.

Aluminium may be entering a tight phase. With China's output now capped (at 45 Mt per year) to control overcapacity and emissions, inventories on the LME have dropped to 700kt. The LME 3-month aluminium benchmark price, which is widely used as a global reference for aluminium pricing, is around $2,654/tonne at the time of publication. Some analysts forecast supply deficits and a move towards $3,000/tonne.

Ags

Global farm markets are soft on the back of ample crops, but select niches are heating up. Argentina's new government on Monday suspended export taxes on soy, corn, wheat (and their byproducts including biodiesel) through October. This is designed to spur exports, though traders warn it could trigger a flood of grain and limit price rises.

In the U.S., farmers face record yields (USDA sees the corn harvest setting all-time highs) and stagnating export demand, prompting the USDA to consider emergency aid for farmers. Corn and soybean futures are near their lowest real levels in years, reflecting large crops and competition from Brazil.

One standout is coffee futures, which have gone parabolic. U.S. tariffs (50% on Brazilian coffee) and dry weather in Brazil have pushed Arabica prices to seven-month highs ($4.24/lb), near record levels.

Overall, crop markets are pressured by big supplies, while some food commodities are spiking on weather and trade disruptions.

Biofuels

Bio markets continue to navigate policy and demand challenges. In the EU, major oil refiners are pulling back on green projects. BP last week abandoned its planned biofuels plant in Rotterdam, citing weak economics. The company also dropped its production target of 100kbpd of biofuels by 2030, instead focusing on co-processing biofuels in existing refineries. This comes off the back of Shell also cancelling biofuel plant construction in Rotterdam, citing profitability concerns.

In the U.S., last week the EPA published a proposed rule to reallocate waived RFS volumes into the 2026-2027 volume obligations, to offset reduced blending from SRE's. The pipeline of exemptions and the plan to reallocate them introduces a potential demand rebound, but in the near term, blending demand remains depressed.

Context: Under the U.S. Renewable Fuel Standard (RFS), all refiners must blend a mandated volume of biofuels into gasoline/diesel to reduce emissions and support domestic biofuel production. However, small refineries may lack blending infrastructure, so meeting these mandates can cut margins or force shutdowns if compliance exceeds profits. Thus, small refineries (<75kbpd) can apply for small-refinery exemption (SRE) requests, which allows the refinery to skip having to buy ethanol/diesel RIN credits. The overall impact of these requests being granted is reduced demand for biofuels, unless the waived obligations are reallocated.

Macro

On a macro level, world demand growth is moderate. China's economy slowed unexpectedly in August amid weak factory output and retail sales, raising talk of further stimulus.

The U.S. labour market is cooling. Nonfarm Payrolls for August came in at +22,000 (vs +75,000 expectation), with the unemployment rate also ticking up to 4.3%. Inflation has stabilised above the Fed's 2% target, but with weaker growth and sticky inflation, the Fed is likely to be more cautious about cutting rates further (to avoid reigniting inflation) or hiking (to avoid worsening economic slowdown).

Here is the U.S. labour and inflation data (August 2025):

Indicator	Latest value	Release date	Comment
Nonfarm Payrolls (NFP)	+22,000	05/09/2025	Significantly below expectations (+75,000)
Unemployment Rate	4.3%	05/09/2025	Up from 4.2% in July
Core CPI (YoY)	+3.1%	11/09/2025	Stable, suggesting underlying inflation pressures

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