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Oil prices rallied yesterday amid growing concerns over Russian and Venezuelan oil supply.
 

Energy - Oil supply risks grow

Oil prices rallied yesterday on growing supply risks facing the market. This strength has continued in early-morning trading today.

There are concerns over Venezuelan oil exports after President Trump announced that the US will impose a blockade on sanctioned oil tankers entering and leaving the country. This puts at risk around 600k b/d of oil exports, the majority of which goes to China. However, flows to the US, currently around 160k b/d, will likely continue. This oil is from Chevron, which previously received a licence from the US government to continue operating in Venezuela. The key questions are, first, how effective this blockade will be, and second, how long it will last. This will be important in determining the impact on the oil market.

Reports yesterday that the US government is preparing even stricter sanctions on Russia’s energy sector pose a larger supply risk to the market -- in case President Putin fails to agree to a peace deal with Ukraine. Given the surplus outlook and Brent trading around $60/bbl, Trump has room to be more aggressive with sanctions.

Weekly inventory data from the Energy Information Administration (EIA) shows that US crude oil inventories fell by 1.27m barrels over the last week. This was much less than the 9.3m barrel decline the API reported the previous day. The draw was primarily driven by stronger exports over the week, with crude oil exports increasing 655k b/d WoW to 4.66m b/d. Meanwhile, gasoline and distillate fuel oil inventories increased by 4.81m barrels and 1.71m barrels, respectively. These builds in refined-product stocks were supported by refinery runs reaching their highest level since early September.

European gas prices rallied yesterday, with TTF settling 2.22% higher on the day amid forecasts for colder than usual weather towards the end of the month. Strength in the oil market likely provided some support as well. However, the latest positioning data continues to indicate that speculators are increasingly bearish on the European gas market. Investment funds sold a further 7.9TWh in TTF over the last reporting week, leaving them with a net short of 92.8TWh. This is the largest net short since early 2020. The gross short stands at a record 546TWh, up 18.4TWh over the week. It continues to pose a risk to the market should we see any supply disruptions or demand surges.
 

Metals – Gold nears all-time high; silver extends record run

Gold is trading just shy of its all-time high above $4,381/oz, a level last seen in October, as tensions rise in Venezuela following Trump’s blockade order for all sanctioned tankers. The US president is also pressuring Nicolas Maduro amid a regional military buildup.

The market is awaiting US inflation data on Thursday, which could signal further monetary easing. This follows the Federal Reserve's third consecutive rate cut earlier this month. For now, traders assign a probability of less than 25% of a reduction in January.

Gold has surged over 60% year-to-date, its strongest annual performance since 1979. The rally is underpinned by robust central bank buying, macro uncertainty, and a structural shift in strategic asset allocation. Geopolitical uncertainty has been a key driver of gold’s exceptional rally this year.

We remain positive on our gold outlook, with macro tailwinds and fundamentals pointing to further upside next year. We expect gold prices to reach new record highs in 2026. The downside should be limited, as any weakness will likely attract renewed interest from both retail and institutional buyers.

Silver, meanwhile, hit another record high above $66.50/oz. Prices have now more than doubled year-to-date. Investor appetite remains strong, as silver-backed ETFs continue to attract inflows. The outlook remains constructive into 2026, supported by robust industrial demand from solar PV installations and battery technologies, alongside sustained investment flows.
 

Agriculture – Soybeans decline on better supply prospects

CBOT soybean prices yesterday hovered near their lowest level since October, pressured by strong global supply prospects and a lack of fresh Chinese buying. In a recent report, CONAB estimates soybean production in Brazil to reach 177.1mt in 2025/26, up 3.3% from last season. Weather remains a key factor, but crop stress to date has been minimal. China has started selling soybeans from state reserves to clear storage ahead of incoming US shipments. It purchased an additional 198kt of US soybeans, according to recent USDA data, bringing total purchases since October to around 3.7mt. China has increased purchases but must continue to buy steadily to meet commitments under a late-October agreement.

Data from Ukraine’s Ministry of Agriculture indicate that grain and legume exports in 2025/26 declined to approximately 13.8mt tons as of 17 December, representing a year-on-year decline of 29%. Total corn shipments stood at 4.8mt (-40% YoY), while wheat exports fell 17% YoY to 7.6mt.

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