Commodity wrap - Oil, natgas, gold, cocoa (20.05.2025)

Oil

• The current price of Brent crude hovers around $65 per barrel, with WTI near $62. In recent weeks, the decline in retail fuel markets has slowed. Crude oil continues to respond positively to news of reduced tariffs between the U.S. and China. However, a credit rating downgrade for the U.S. by Moody’s has been a negative factor.
• OPEC+ is accelerating the rollback of voluntary production cuts (2.2 million barrels per day), which could boost supply and raise the risk of oversupply starting in Q4 2025. Oil price forecasts for 2025 have been revised down to $65 per barrel for Brent, reflecting growing supply and uncertain demand. Increased output from Brazil, the Gulf of Mexico, and Guyana also contributes to global supply.
• Forecasts for H2 2025 suggest moderate volatility and a potential decline in Brent prices toward $60—or even lower in 2026. Key variables include OPEC+ decisions and the pace of economic growth in China and the U.S.

Crude is beginning to consolidate between $61 and $64 per barrel. Source: xStation5

Natural Gas

• U.S. natural gas prices continue to decline due to subdued demand and mild weather, which reduces power generation needs. Current gas inventories are nearly 3% above the 3-year average, signaling adequate rebuilding pace ahead of the next winter season. Inventories rose by 110 bcf last week.
• The latest weather outlook indicates cooler temperatures may persist through late May and early June, further curbing electricity demand. Edison Electric Institute reports that power generation last week was nearly 3% lower year-over-year. However, over the past 52 weeks, generation was up 3.6% versus the prior comparable period.
• As of Monday, gas production reached 106.3 bcfd, while demand totaled 65.5 bcfd. LNG exports stood at 15.2 bcfd. LNG prices remain under pressure. TTF gas price forecasts for 2025 have been cut to $12.6/MMBtu, citing weaker demand in Asia and the EU's improved storage flexibility.

Gas is approaching key support at $3/MMBtu amid mild spring weather in the U.S. The upcoming contract roll could add about $0.40 to prices. However, further downside pressure and range-bound trading may follow, as seasonality suggests. Source: xStation5

Gold

• Gold reached a record high of $3,500/oz in April before correcting to current levels near $3,220–3,240/oz. Price increases have been driven by economic uncertainty, geopolitical tensions, and expectations for monetary policy easing by major central banks.
• Strong demand from central banks and ETFs, along with limited supply, continues to support high prices. Forecasts for 2025 remain mixed: most analysts expect sustained elevated prices ($3,200–3,500/oz), though cautious scenarios ($2,500–3,000/oz) are becoming more frequent.
• Goldman Sachs maintains its forecast at $3,700/oz for this year. However, the previous bullish target of $4,500/oz appears out of reach amid easing trade tensions.
• The People’s Bank of China increased its gold reserves in April, marking the sixth consecutive purchase. Physical investment demand—spanning central banks, coins, bars, and ETFs—is now at an all-time high. A recent U.S. credit rating downgrade, driven by concerns over financial stability, adds another potential bullish driver for gold. U.S. national debt now exceeds $36 trillion.

Demand from central banks remains strong, though its share of overall demand has dipped due to surging investor demand. Source: Bloomberg Finance LP, XTB

Q1 this year brought the first gold market deficit in over a decade. Source: Bloomberg Finance LP, XTB 

While ETFs recently sold off gold, Q2 is expected to bring renewed positive demand. Source: Bloomberg Finance LP, XTB • Lower trade concerns led to a significant COMEX inventory drawdown, possibly triggering the recent correction. Source: Bloomberg Finance LP, XTB

Total physical investment demand for gold is at an all-time high. Source: Bloomberg Finance LP, XTB

Speculators are exiting COMEX, while long and net positions in China are surging again. Source: Bloomberg Finance LP, XTB 

Gold is following its 5- and 10-year seasonal patterns, suggesting potential gains in H2. Source: Bloomberg Finance LP, XTB

Cocoa

•  After record gains in 2024 (up to $12,900/ton), cocoa prices dropped more than 30% in 2025 but recently rebounded above $11,000.
• This year’s decline stems from improved production outlooks and expectations of a supply surplus (142,000 tons for the 2024/25 season). However, a downward revision is possible due to recent weak deliveries from Ivory Coast.
• Top producers (Ivory Coast, Ghana) continue to face structural issues: aging plantations, plant disease, and climate change. Despite optimistic forecasts, weather conditions and crop quality remain concerns. Falling prices have curtailed demand, and chocolate producers have announced retail price hikes for 2025 to offset prior cost surges.
• The first supply surplus in four years is projected, though the market remains vulnerable to weather and structural shocks in West Africa. If weather does not improve, output expectations for 2025/26 could decline, potentially pushing prices back above $12,000/ton.
• Ghana plans to acquire 200,000 hectares for cocoa plantations. Ghana’s cocoa output has dropped to multi-year lows, currently ranging between 400,000 and 500,000 tons—down from over 1 million tons a few years ago.
• Cocoa deliveries in Ivory Coast reached 1.58 million tons as of May 18, up 10.5% year-over-year.

Since the last contract roll, cocoa has gained over 20%, returning above $11,000/ton. Source: xStation5