Commodity wrap - Oil, Gold, Natgas, Cocoa (07.10.2025)

Oil

• OPEC+ raised its production limit for November by 137,000 barrels per day (bpd). This level mirrors the October increase and is disappointing for the market.

• The announcement follows earlier rumours that OPEC+ would raise production by 500,000 bpd over the next three months, which would have fully offset the cuts implemented during the 2020 pandemic demand slump.

• Ukraine is continuing attacks on oil infrastructure in Russia, leading to a reduction in the country's processing capacity. It is estimated that nearly 40% of capacity may be offline.

• Ukraine has targeted as many as 15 refineries in Russia over the last two months. In the first two weeks of September, the flow of refined fuels from Russian refineries totalled only 2 million bpd. Russia's full refining capacity stands at 6.5 million bpd, though normal usage is typically 4–5 million bpd.

• In September, when the voluntary production limit was fully reinstated, OPEC's own output rose by 400,000 bpd, reaching 29.05 million bpd—the highest level in two and a half years.

• The IEA expects that the market surplus could exceed 3 million bpd next year. Given these forecasts, Goldman Sachs anticipates Brent crude prices dropping to $55 per barrel in 2026.

• Sparta Commodities suggests that large cargoes of US crude heading to Europe could put pressure on the Brent/WTI spread.

The WTI/Brent spread. As seen, the one-year average points to a smaller difference between the benchmarks. Cheaper WTI oil may pressure Brent prices downward, particularly with large US deliveries. Source: Bloomberg Finance LP, XTB

Crude oil prices are returning to declines after a strong revival earlier this week. If Russian supply does not drop, upward pressure from the increase in OPEC+ production may prevail among sellers. Source: xStation5

Gold

• Gold logged nearly 2% price gains at the start of the week and continued its rally during the second session, approaching the $4,000 per ounce level. The year-to-date increase stands at approximately 50%.

• The price surge is driven by significant uncertainty over the situation in Europe following the resignation of another Prime Minister in France, and in the US due to the ongoing week-long government shutdown.

• Despite a lack of comprehensive data, the Fed is expected to cut interest rates at its late-October meeting and continue its path of rate reductions in subsequent meetings, with a potential decline to the 3% level by mid-next year.

• It is worth noting that a clear strengthening of the US Dollar has been observed since mid-September, which has not hindered the rise in gold prices. However, during previous major upward corrections in the dollar (in April or July), gold prices saw pullbacks or at least consolidation.

Gold prices are currently being driven by strong demand from ETFs. If ETFs stop buying, it could signal a reversal in gold. However, this has not been observed since April. Source: Bloomberg Finance LP, XTB

Gold is expensive, but not extremely expensive relative to its averages. A strong overbought signal is typically three standard deviations from the one-year average and four standard deviations from the five-year average. Source: Bloomberg Finance LP, XTB

We do not currently have the latest CFTC data, but we observe a significant reduction in speculative long positions on the Shanghai commodity exchange, which may be a warning signal. Strong reductions in long positions in 2020, 2023, and 2024 led to longer corrections or consolidation in gold. Source: Bloomberg Finance LP, XTB

Gold is posting very strong gains despite the strengthening US Dollar, creating a clear divergence. Nevertheless, it is worth noting that in 2024, a strong dollar appreciation did not prevent gold from rising toward $3,000. Source: xStation5

Natural Gas

• Natural gas prices remain elevated, returning close to the $3.5/MMBTU mark ahead of the approaching US heating season.

• Temperature outlooks in the US still indicate higher-than-average temperatures, but media narrative suggests distinct weather shifts that are expected to lead to increased consumption.

• Recent gas consumption remains slightly above averages, but the start of inventory drawdowns is still a few weeks away.

• The latest EIA report was published despite the government shutdown, which also affects the availability of EIA personnel within the DOE. Current plans, however, indicate the continuation of data publication.

• The last report showed an inventory increase significantly below expectations and below the five-year average. Nevertheless, subsequent reports may show inventory growth closer to the five-year average, around 80 billion cubic feet (bcf) per week.

• Gas production on Monday amounted to 107.6 bcfd, a level almost 5% higher than a year ago, while demand dropped significantly compared to previous days, reaching 68.8 bcfd—only 0.1% higher than the previous year.

• The situation looks distinctly worse in Europe, where storage filling stands at 85% compared to a five-year average of 90%. Inventories in Germany have already begun to fall due to lower-than-standard temperatures. This situation could evolve into a very negative scenario regarding gas availability during the winter period.

Comparative inventories relative to the five-year average have stopped rising (inverted axis), but are already higher than last year! The oversupply is enormous, but prices have rebounded due to weather expectations. Source: Bloomberg Finance LP, XTB

Prices are theoretically at a short-term seasonal peak. If gas inventories rebound more strongly now than in recent weeks, the gas price may indeed see a correction. However, if gas inventories grow slower, the long-term upward trend could point to further gains until mid-November, when the seasonal price peak is usually noted. Source: Bloomberg Finance LP, XTB

The gas price is clearly rebounding after the September rollover—similar to last year. Last year, a local peak was set at the beginning of October, followed by a sharp correction. If this situation were to repeat, we should expect the start of a correction around the middle of the month. Nevertheless, last year saw another strong rally after the subsequent rollover. Source: xStation5

Cocoa

• Cocoa prices fell sharply at the start of this week amid anticipation of initial data on cocoa deliveries to ports in Côte d'Ivoire.

• Prices dropped to a nearly 20-month low, approaching the $6,000 per tonne level.

• An increase in speculative short positions is observed for London-traded cocoa, which may be linked to greater confidence regarding larger cocoa deliveries during the main season in West African countries. CFTC data are currently unpublished due to the US government shutdown.

• Côte d'Ivoire and Ghana have decided to raise the farm-gate price for cocoa, giving farmers greater certainty about future incomes, which could potentially lead to increased production outlooks in subsequent seasons.

• The new purchase price is set at 2,800 francs per kilogram, indicating a price of nearly $5 per kilogram. This also suggests that trader margins may shrink significantly, and prices should not fall below $5,000 per tonne.

• The increase in the purchase price is linked to the upcoming elections in Côte d'Ivoire on October 25th. President Alassane Ouattara is seeking a fourth term. Cocoa accounts for 14% of the country's GDP, and the sector employs 1 million people.

• Despite the clear drop in exchange prices, retail prices for chocolate products will most likely remain high or may even rise, given that manufacturers had to contract supplies at higher levels. This may result in no demand rebound being observed in the upcoming season.

• The market already exhibits a minimal backwardation, indicating significantly greater certainty regarding future deliveries and reduced pressure to purchase cocoa at current prices.

Cocoa prices are clearly falling, but exchange inventories have also been dropping. If inventories do not start rebounding now at the start of the season, the market might quickly reverse the declines, although the price seems to have a solid floor at the $5,000 per tonne level. Source: Bloomberg Finance LP, XTB

The forward curve is in minimal backwardation. If the price begins to show contango, even at the short end, it could signal significant upcoming supply and decreasing demand. Source: Bloomberg Finance LP

Assuming an uptrend started in mid-2022 and ended in December 2024, the price has fallen below the 61.8 Fibonacci retracement level. This potentially suggests that the price has broken out of the uptrend. Looking from the perspective of the 2024 rally, the price is currently testing the 78.6 retracement, and the 61.8 level was breached in mid-September. Source: xStation5